FY14-15 Independent Financial Statement Audit 12-06-16

CITY OF CARMEL-BY-THE-SEA
CITY COUNCIL
Staff Report
SR 2016-1216
December 6, 2016
Orders
TO:
Honorable Mayor and City Council Members
SUBMITTED BY:
Paul Wood, CPA - Finance Manager
APPROVED BY:
Chip Rerig, City Administrator
SUBJECT:
Acceptance of FY14-15 Independent financial statement audit
RECOMMENDATION
Accept the Independent Auditors Report for the Year Ended June 30, 2015.
BACKGROUND / SUMMARY
Each year, the City is required by the State of California to have its financial statements audited by an
independent Certified Public Accountant. At the end of the audit, the auditor issues a report that states
whether, in the auditors opinion, the financial statements are fairly presented in accordance with Generally
Accepted Accounting Principles (GAAP).
The Citys FY2014-15 financial statement audit has been completed and has received an unqualified (clean)
opinion by Moss, Levy & Hartzheim (auditor). An unqualified opinion concludes that the financial statements
present fairly, in all material respects, the respective financial position of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of the City, as of June
30, 2015 and the respective changes in financial position and, where applicable, cash flows thereof, and the
budgetary comparison information for the General Fund for the year.
One major change to the financial statements this year is the implementation of GASB 68, which requires
governments to report their net pension liability as a recognized liability in their accrual-based financial
statements, not just as a note to the financial statements. This issue has been a concern and has been
discussed at length among a number of previous City Councils. It is important to understand that this accrual
is a reporting change only, it does not change the financial position of the City at all, and it is no reflection on
the current FY14-15 operational performance.
The net pension liability is the actuarially determined amount that the City would owe all of its current and
former employees over and above the current value of its plan assets. The effect of recognizing the net
pension liability for the City is an increase in long-term liabilities of more than $15 million, but in the words of
the Governmental Accounting Standards Board (GASB), While this information will, in some cases, give the
appearance that a government is financially weaker than it was previously, the financial reality of the
governments situation will not have changed.
Additionally, the auditor issues other documents, the Management Report and the Auditors Communication
Letter, that explain other issues related to the audit and that contain a list of findings that the auditors believe
are important to discuss with management, and to which management has an opportunity to respond. This
year, we had several findings that encompass the entirety of the Citys internal control structure and
operations. Managements responses to each finding are recorded along with each finding.
FISCAL IMPACT
None.
PRIOR CITY COUNCIL ACTION
None.
ATTACHMENTS
1. City of Carmel-by-the-Sea FY2014-15 Audited Financial Statements
2. City of Carmel-by-the-Sea FY2014-15 Management Report and Auditors Communication Letter
THE CITY OF CARMEL-BY-THE-SEA

BASIC FINANCIAL STATEMENTS
JUNE 30, 2015
TABLE OF CONTENTS
June 30, 2015
FINANCIAL SECTION
Independent Auditors Report ......................................................................................................................................1
Managements Discussion and Analysis ......................................................................................................................4
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position ...............................................................................................................................15
Statement of Activities and Changes in Net Position .....................................................................................16
Fund Financial Statements:
Governmental Funds:
Balance Sheet.............................................................................................................................................18
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position.................21
Statement of Revenues, Expenditures, and Changes in Fund Balances ....................................................22
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of
Governmental Funds to the Statement of Activities ...............................................................................25
Notes to the Basic Financial Statements .........................................................................................................27
Required Supplementary Information
Schedule of Funding Progress Other Post-employment Benefits ..........................................................59
Schedule of the Citys Proportionate Share of the Net Pension Liability ..................................................60
Schedule of Contributions..........................................................................................................................64
Budgetary Comparison Schedule General Fund .....................................................................................68
Schedule of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual:
Harrison Memorial Library Special Revenue Fund................................................................................69
Ambulance Special Revenue Fund .........................................................................................................70
TABLE OF CONTENTS
June 30, 2015
(Continued)
Other Supplemental Information
Non-major Governmental Funds:
Combining Balance Sheet ..........................................................................................................................72
Combining Statement of Revenues, Expenditures, and Changes in Fund Balances..................................74
Schedules of Revenues, Expenditures, and Changes in Fund Balances Budget and Actual:
Traffic Safety Fund.................................................................................................................................76
Road Impact Fees Fund ..........................................................................................................................77
Grants Fund ............................................................................................................................................78
Forest Theater Fund ................................................................................................................................79
Gas Tax Fund..........................................................................................................................................80
Measure D Fund .....................................................................................................................................81
PARTNERS
RONALD A LEVY, CPA
CRAIG A HARTZHEIM, CPA
HADLEY Y HUI, CPA
ALEXANDER C HOM, CPA
ADAM V GUISE, CPA
TRAVIS J HOLE, CPA
COMMERCIAL ACCOUNTING & TAX SERVICES

433 N. CAMDEN DR., SUITE 730
BEVERLY HILLS, CA 90210
TEL: 310.273.2745
FAX: 310.670.1689
www.mlhcpas.com
GOVERNMENTAL AUDIT SERVICES

5800 HANNUM AVE., SUITE E
CULVER CITY, CA 90230
TEL: 310.670.2745
FAX: 310.670.1689
www.mlhcpas.com
INDEPENDENT AUDITORS REPORT

To the Honorable Mayor and Members
of the City Council of the City of Carmel by-the-Sea
Carmel by-the-Sea, California
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, each major fund, and the aggregate
remaining fund information of the City of Carmel by-the-Sea (City), California, as of and for the fiscal year ended June 30,
2015, and the related notes to the financial statements, which collectively comprise the Citys basic financial statements as
listed in the table of contents.
Managements Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance with
accounting principles generally accepted in the United States of America; this includes the design, implementation, and
maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from
material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in
accordance with auditing standards generally accepted in the United States of America and the standards applicable to
financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.
Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial
statements. The procedures selected depend on the auditors judgment, including the assessment of the risks of material
misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entitys preparation and fair presentation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. Accordingly, we express no such opinion. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by
management, as well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions.
1
OFFICES: BEVERLY HILLS CULVER CITY SANTA MARIA
MEMBER AMERICAN INSTITUTE OF C.P.A.S CALIFORNIA SOCIETY OF MUNICIPAL FINANCE OFFICERS CALIFORNIA ASSOCIATION OF SCHOOL BUSINESS OFFICIALS
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial
position of the governmental activities, each major fund, and the aggregate remaining fund information of the City, as of
June 30, 2015, and the respective changes in financial position, for the fiscal year then ended in accordance with accounting
principles generally accepted in the United States of America.
Emphasis of Matter
Change in Accounting Principles
As discussed in Note 1 to the basic financial statements, effective July 1, 2014, the City of Carmel by-the-Sea adopted the
provisions of Governmental Accounting Standards Board (GASB) Statement No. 68, Accounting and Financial Reporting
for Pensions and Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date.
Our opinion is not modified with respect to these matters.
Other Matters
Accounting principles generally accepted in the United States of America require that the managements discussion and
analysis, the Schedule of Funding Progress of Other Postemployment Benefits, the Schedule of the Citys Proportionate
Share of the Net Pension Liability, the Schedule of Contributions, and the Budgetary Comparison Schedules of the
General Fund and major special revenue funds on pages 4 through 14 and pages 59 through 70 be presented to
supplement the basic financial statements. Such information, although not a part of the basic financial statements, is
required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting
for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied
certain limited procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with managements responses to our inquiries, the basic
financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express
an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient
evidence to express an opinion or provide any assurance.
Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the
Citys basic financial statements. The Budgetary Comparison Schedules for the Nonmajor Governmental Funds and the
Combining Financial Statements for the Nonmajor Governmental Funds are presented for purposes of additional
analysis and are not a required part of the basic financial statements.
The Budgetary Comparison Schedules for the Nonmajor Governmental Funds and the Combining Financial Statements
for the Nonmajor Governmental Funds are the responsibility of management and were derived from and relate directly to
the underlying accounting and other records used to prepare the basic financial statements. Such information has been
subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying accounting and other
records used to prepare the basic financial statements or to the basic financial statements themselves, and other
additional procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole.
Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated October 24, 2016, on our
consideration of the Citys internal control over financial reporting and on our tests of its compliance with certain
provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to
describe the scope of our testing of internal control over financial reporting and compliance and the results of that
testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an
integral part of an audit performed in accordance with Government Auditing Standards in considering the Citys internal
control over financial reporting and compliance.
Moss, Levy & Hartzheim, LLP

Culver City, California
October 24, 2016
City of Carmel-by-the-Sea, California

Basic Financial Statements
For the fiscal year ended June 30, 2015
Managements Discussion and Analysis
This section provides a narrative overview and analysis of the financial activities of the City of
Carmel-by-the-Sea (City) for the fiscal year ended June 30, 2015. It should be read in conjunction with
the accompanying basic financial statements.
FINANCIAL HIGHLIGHTS
As of June 30, 2015, total assets of the City exceeded its liabilities by $23,417,030 (net position).
The portion of net position that may be used to meet the governments ongoing obligations to
citizens and creditors (unrestricted net position) is $ (12,992,711). The portion of net position that
is restricted and may only be used for specific purposes is $3,862,473. The remaining $32,547,268
is invested in capital assets, net of related debt. The large reduction in unrestricted net position is
due to the implementation if GASB Statement 68, which requires municipalities to recognize
accrued pension liabilities for the first time as of June 30, 2015. The City made a prior period
adjustment in the amount of $15,703,462 to recognize this liability.
As of June 30, 2015, the Citys governmental funds reported combined ending fund balances of
$12,942,410. Of this balance, $3,903,533 is restricted because it represents resources that are
required to be spent for specific purposes as provided by an external source. The committed
balance of $4,561,070 represents a Council commitment for economic uncertainties and anticipated
future short-term structural deficits. The assigned fund balances in the General Fund, Special
Revenue Fund, Capital Projects Fund, and Nonmajor Governmental Funds amounted to $3,621,057
and represented Capital Projects, Library, Parking, Traffic Safety, Streets and Roads, and Forest
Theater items. The remaining fund balance is unassigned.
Capital assets, net of depreciation, increased to $39,246,893 from $38,273,101, mostly due to an
increase in Construction in Progress $1,417,137 and built-out capitals of $984,320, with an offset
of depreciation of $1,427,665.

Managements Discussion and Analysis, Continued
OVERVIEW OF THE ANNUAL FINANCIAL REPORT

This Annual Financial Report includes a Financial Section, which is made up of several different parts:
1) Financial section, which includes the Managements Discussion and Analysis (this part), the Basic
Financial Statements, which include the Government-wide and the Fund Financial Statements
along with the notes to these financial statements and Combining and Individual Fund Financial
Statements and Schedules.
The Basic Financial Statements
The Basic Financial Statements are comprised of the Government-wide Financial Statements and the
Fund Financial Statements; these two sets of financial statements provide two different views of the
Citys financial activities and financial position.
The Government-wide Financial Statements
The Government-wide Financial Statements provide a broad overview of the Citys activities as a
whole and comprise the Statement of Net Position and the Statement of Activities. The Statement of
Net Position provides information about the financial position of the City as a whole, including all its
capital assets and long-term liabilities on the full accrual basis, similar to that used by corporations.
The Statement of Activities provides information about all the Citys revenues and all its expenses,
also on the full accrual basis, with the emphasis on measuring net revenues or expenses of each the
Citys programs. The Statement of Activities explains in detail the change in Net Position for the fiscal
year.
All of the Citys activities are grouped into Governmental Activities and Business-type activities, as
explained below. All the amounts in the Statement of Net Position and the Statement of Activities are
separated into Governmental Activities and Business-type Activities in order to provide a summary of
these two activities of the City as a whole.
Governmental activities All of the Citys basic services are considered to be governmental
activities, including general government, community development, economic development, public
safety, animal control, engineering, community events, public improvements, planning and zoning,
building inspections, and general administration. These services are supported by general City
revenues such as taxes and by specific program revenues such as developer fees.

OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT, Continued

The Government-wide Financial Statements, Continued
Business-type activities The Citys does not currently have any business-type activities.
Fund Financial Statements
A fund is a grouping of related accounts that is used to maintain control over resources that have been
segregated for specific activities or objectives. The City, like other state and local governments, uses
fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of
the funds of the City can be divided into two categories: governmental funds and proprietary funds.
Governmental funds. Governmental funds are used to account for essentially the same functions
reported as governmental activities in the Government-wide Financial Statements. However, unlike the
Government-wide Financial Statements, Governmental Fund Financial Statements focus on near-term
inflows and outflows of spendable resources, as well as on balances of spendable resources available at
the end of the fiscal year. Such information may be useful in evaluating a governments near-term
financing requirements.
Because the focus of the Governmental Fund Financial Statements is narrower than that of the
Government-wide Financial Statements, it is useful to compare the information presented for
governmental funds with similar information presented for governmental activities in the Governmentwide Financial Statement. By doing so, readers may better understand the long-term impact of the
governments near-term financial decisions. Both the governmental fund balance sheet and the
governmental fund statement of revenues, expenditures, and changes in fund balances provide a
reconciliation to facilitate this comparison between governmental funds and governmental activities.
The Governmental Fund Financial Statements provide detailed information about each of the Citys
most significant funds, called major funds. The concept of major funds, and the determination of which
are major funds, was established by GASB Statement 34 and replaces the concept of combining like
funds and presenting them as one total. Instead, each major fund is presented individually, with all
non-major funds summarized and presented only in a single column. Subordinate schedules present the
detail of these non-major funds. Major funds present the major activities of the City for the fiscal year,
and may change from year to year as a result of changes in the pattern of the Citys activities.

OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT, Continued

Fund Financial Statements, Continued
For the fiscal year ended June 30, 2015, the Citys major funds are as follows:
GOVERNMENTAL FUNDS:
General Fund
Harrison Memorial Library Special Revenue Fund
Parking Special Revenue Fund
Ambulance Special Revenue Fund
Notes to the Basic Financial Statements
The notes provide additional information that is essential to a full understanding of the data provided in
the Government-wide and Fund Financial Statements. The notes to the basic financial statements can
be found on pages 27-57 of this report. Required Supplementary Information follows the notes to the
basic financial statements, and begins on Page 58.
Combining and Individual Fund Financial Statements and Schedules
The combining statements referred to earlier in connection with non-major governmental funds are
presented following the notes to the financial statements. Combining and individual fund statements
can be found on pages 71-81 of this report.

GOVERNMENT-WIDE FINANCIAL ANALYSIS

As noted earlier, net assets may serve over time as a useful indicator of a governments financial
position.
In the case of the City, assets exceeded liabilities by $23,417,030 as of June 30, 2015.
The Summary of Net Position as of June 30, 2015, and 2014, follows:
Summary of Net Position
2015
Governmental
Activities
Current and other assets
Noncurrent assets
Deferred outflows of resources
Total assets and deferred outflows
Current and other liabilities
Long-term liabilities
Deferred inflows of resources
Total liabilities and deferred inflows
Net position:
Net investment in
capital assets
Restricted
Unrestricted
Total net position
14,796,816
39,246,893
1,040,712
55,084,421
3,155,654
24,739,892
3,771,845
31,667,391
2014
Governmental
Activities
$
23,417,030
16,793,000
1,871,113
973,792
1,040,712
3,885,617
141,105
10,961,441
3,771,845
14,874,391
25,522,348
2,616,731
6,266,725
7,024,920
1,245,742
(19,259,436)
51,198,804
3,014,549
13,778,451
32,547,268
3,862,473
(12,992,711)
$
12,925,703
38,273,101
Change
34,405,804
(10,988,774)

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued

The change in net position for the fiscal years ended June 30, 2015, and 2014, follows:
Changes in Net Position
2015
Governmental
Activities
Revenues:
Program revenues:
Charges for services
Grants and contributions:
Operating
Capital
General revenues:
Property taxes
and assessments
Transient occupancy taxes
Sales tax
Franchises
Business licenses
Use of money and property
Other general revenues
Total revenues
Expenses:
Governmental activities:
Administration
Building Maintenance
Public safety
Public works
Forest, parks and beaches
Culture and recreation
Economic development
Interest and fiscal charges
Total expenses
Change in net position
Net position:
Beginning of fiscal year
Prior period adjustments
End of fiscal year
1,529,097
2014
Governmental
Activities
924,584
Changes
604,513
1,444,296
331,719
1,282,214
-
162,082
331,719
5,127,974
5,593,689
5,280,418
430,430
606,128
163,648
631,682
21,139,081
4,881,534
5,185,880
5,115,880
994,468
549,190
76,880
184,660
19,195,290
246,440
407,809
164,538
(564,038)
56,938
86,768
447,022
1,943,791
3,724,546
1,832,618
6,685,310
2,003,332
581,319
2,605,877
326,956
365,043
18,125,001
4,067,934
2,924,447
4,299,954
2,227,067
484,119
2,453,842
363,342
346,674
17,167,379
(343,388)
(1,091,829)
2,385,356
(223,735)
97,200
152,035
(36,386)
18,369
957,622
3,014,080
2,027,911
34,405,804
(14,002,854)
23,417,030
32,377,893
34,405,804
986,169
2,027,911
(14,002,854)
(10,988,774)


Revenues
The Citys total revenues for governmental activities were $21,139,081 for the fiscal year ended June
30, 2015. Approximately 76% of the Citys key revenues are generated from three major sources.
The following discusses variances in key revenues from the prior fiscal year:
1. Sales Tax. Annual receipts increased approximately 3.2%. This increase is attributed to a
slight increase in spending mainly in the food and beverage sector, along with increased
allocations from the countywide pool. We anticipate that sales tax revenue will remain flat
next fiscal year.
2. Property Taxes. Property taxes increased 5% over last year reflecting the strengthening
real estate market over the past year.
3. Transient occupancy taxes. Hostelry taxes increased 7.9% reflecting the continuing
growth in tourism and potential benefit from citywide and individual marketing efforts.
10


Expenses
Governmental activity expenses of the City for the year totaled $18,125,001. Safety Services costs
represented 37% of total governmental activities expenses. Public safety expenses represented the
largest single expense for governmental activities.
Governmental Activities
The following table shows the cost of each of the Citys major programs and the net cost of the
programs. Net cost is the total cost less fees and other direct revenue generated by the activities. The
net cost reflects the financial burden that was placed on the Citys taxpayers by each of the programs.
The total cost of services and the net cost of services for the fiscal years ended June 30, 2015, and
2014, are as follows:
2015
2014
Total Cost
of Services
Administration
Building maintenance
Public safety
Public works
Total
Net Cost
of Services
Total Cost
of Services
Net Cost
of Services
3,724,546
1,832,618
6,685,310
2,003,332
581,319
2,605,877
326,956
365,043
3,624,713
1,832,618
5,657,933
660,634
451,093
1,900,899
326,956
365,043
4,067,934
2,924,447
4,299,954
2,227,067
484,119
2,453,842
363,342
346,674
4,052,290
2,924,447
3,616,052
1,290,920
318,713
2,048,143
363,342
346,674
18,125,001
14,819,889
17,167,379
14,960,581
11


Revenues by source for the fiscal years ended June 30, 2015, and 2014, are as follows:
Revenues by Source - Governmental Activities

2015
Use of money &
Other 2.99%
property 0.77%
Business licenses
2.87%
Charges for
services 7.23%
Operating grants
6.83%
Franchises 2.04%
Capital grants
1.57%
Sales and use tax
24.98%
Property taxes
24.26%
Transient
occupancy tax
26.46%
Revenues by Source - Governmental Activities

Other general
2014 Use of money
revenues 0.96%
and property
0.40%
Business licenses
2.86%
Charges for
services 4.82%
Operating grants
6.68%
Capital grants
0.00%
Franchises 5.18%
Property taxes
25.43%
Sales tax 26.65%
Transient
occupancy taxes
27.02%
12


Financial Analysis of the Governments Funds
The City of Carmel-by-the-Sea uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements. The fund financial statements focus on individual parts of the
City government, reporting the Citys operations in more detail than the government-wide
financial statements.
Governmental funds. The Citys governmental funds provide information on near-term inflows,
outflows, and balances of spending resources. At the fiscal year ended June 30, 2015, the Citys
governmental funds reported combined fund balances of $12,942,410. This is an increase of
$2,220,070 or 21% over last year. The increase was due to a couple of reasons: (1) prior period
adjustments netting a total of $658,406, and (2) an operating surplus of $1,561,664. The General
Fund is the chief operating fund of the City. At the fiscal year ended June 30, 2015, the General
Fund had a fund balance that totaled $7,849,809 of which $1,541,150 was unassigned and
available for ongoing operations.
General Fund Budgetary Highlights
The difference between the final budget and actual revenues reflects a negative amount of
$2,721,540. This was mainly due to a budgeting discrepancy between revenues and transfers,
resulting in total revenues being over-budgeted.
There was no difference between the total original expenditures budget and the total final
amended budget. Actual expenditures were $2,119,910 under budget (12% of budget). This was
mainly due to unspent capital outlay for projects and fixed assets.
Capital Assets
The Citys investment in capital assets for its governmental activities as of June 30, 2015,
amounted to $39,246,893. This investment in capital assets includes roads, curbs and gutters,
streets and sidewalks, and drainage systems.
Land
Art
Construction in progress
Buildings and improvements
Vehicles
Infrastructure
Machinery and equipment
Total
13
Governmental Activities
2015
2014
5,101,641
$
3,633,723
1,467,918
1,664,067
219,284
18,453,572
19,157,975
407,317
406,417
13,167,775
12,842,666
452,521
545,118
39,246,893
$
38,273,101

More detail of the capital assets and current activity can be found in the notes to the
financial statements on Pages 31 and 32 for significant accounting policies and Note 5 on
Page 44 for other capital asset information.
Debt Administration
Debt, considered a liability of governmental activities, increased by $10,987,070, reflecting the
pay down of the Sunset bond, the Pension Obligation bonds and lease obligations ($1,375,220),
offset by an increase in the OPEB obligation, and most dramatically, by the GASB 68 accrual of
the net pension liability, see Note 6 starting on page 45 for detailed information on the long-term
debt. Compensated absences increased by $134,064 to $603,015.
Economic Outlook
Fiscal year 2015-2016 will continue to be another challenging fiscal year. The continuing global
economic slowdown will impact us locally, as we expect international travel to slow, offset to a
degree by California travelers visiting closer to home destinations.
The Citys major General Fund revenue sources, with the exception of property taxes, are
expected to flatten as the economy continues to slow locally. Also, with the anticipation of an
El Nino winter storm pattern, city revenues from tourism are at risk.
The City maintains a multi-year forecasting model to project anticipated revenues and
expenditures. The model predicts continued flat to positive earnings through fiscal year 20232024. The Citys financial reserves will ensure that service levels are maintained until fiscal year
20232024.
Requests for Information
This Comprehensive Annual Financial Report is intended to provide citizens, taxpayers,
investors, and creditors with a general overview of the Citys finances. If you have any questions
about this report, need additional financial information, or would like to obtain component unit
financial statements, contact the City of Carmel-by-the-Sea Finance Department, P O Box CC,
Carmel-by-the-Sea, CA 93921, or visit the Citys web page at http://ci.carmel.ca.us/carmel.
14
Statement of Net Position
June 30, 2015
Governmental
Activities
ASSETS
Cash and investments
Cash and investments with fiscal agent
Receivables:
Accounts, net of allowance
Interest
Intergovernmental
Capital assets:
Non-depreciable assets
Depreciable assets, net
11,426,657
400,015
2,452,168
4,577
513,399
6,765,708
32,481,185
Total Assets
54,043,709
DEFERRED OUTFLOWS OF RESOURCES

Pension
1,040,712
Total Deferred Outflows of Resources
1,040,712
Total Assets and Deferred Outflows of Resources
55,084,421
LIABILITIES
Accounts payable
Accrued liabilities
Interest payable
Deposits payable
Long-term liabilities:
Due within one year
Due in more than one year
974,438
283,401
41,060
596,567
1,260,188
24,739,892
Total Liabilities
27,895,546
DEFERRED INFLOWS OF RESOURCES

Pension
3,771,845
Total Deferred Inflows of Resources
3,771,845
Total Liabilities and Deferred Inflows of Resources
31,667,391
NET POSITION
Net investment in capital assets
Restricted
Community development
Streets and roads
Measure D
Debt service
Unrestricted
32,547,268
372,659
265,806
2,865,053
358,955
(12,992,711)
Total Net Position
See notes to basic financial statements

15
23,417,030
Statement of Activities
For the Fiscal Year Ended June 30, 2015
Functions/Programs
Governmental Activities:
Administration
Public safety
Public works
Forest, parks, and beaches
Interest on long-term debt
Total Governmental Activities
Expenses
Program Revenues
Operating
Capital
Charges for
Contributions Contributions
Services
and Grants
and Grants
$ 3,724,546
1,832,618
6,685,310
2,003,332
581,319
2,605,877
326,956
365,043
66,190
18,953
108,733
485,669
130,226
686,025
$ 18,125,001
$ 1,529,097
$ 1,444,296
918,644
525,310
33,643
331,719
331,719
General Revenues:
Taxes:
Property taxes, levied for general purposes
Transient occupancy taxes, levied for general purposes
Sales taxes
Franchise taxes
Business licenses
Motor vehicle in lieu, unrestricted
Investment earnings
Other
Net (Expenses)
Revenues and
Changes in
Net Position
Governmental
Activities
$ (3,624,713)
(1,832,618)
(5,657,933)
(660,634)
(451,093)
(1,900,899)
(326,956)
(365,043)
(14,819,889)
5,127,974
5,593,689
5,280,418
430,430
606,128
382,145
163,648
249,537
Total general revenues
17,833,969
Change in net position
3,014,080
Net position - beginning of fiscal year

Prior period adjustments
Net position, beginning of fiscal year, restated
Net position - end of fiscal year

16
34,405,804
(14,002,854)
20,402,950
$ 23,417,030
CITY OF CARMEL BY-THE-SEA

MAJOR GOVERNMENTAL FUNDS
The Fund Financial Statements present only individual major funds, while nonmajor funds are
combined in a single column.
General Fund This fund is the primary operating fund of the City and accounts for all activities
except those legally or administratively required to be accounted for in other funds.
Harrison Memorial Library Special Revenue Fund This fund is used to account for activities
associated with the Harrison Memorial Library.
Parking Special Revenue Fund This fund is used to account for activities associated with
parking in-lieu fees.
Ambulance Special Revenue Fund This fund is used to account for activities associated with
ambulance service billings, which have been outsourced to a third party.
17
Balance Sheet
Governmental Funds
June 30, 2015
Harrison Memorial
Library
Special Revenue
Fund
General
Fund
Assets
Receivables:
Accounts, net of allowance
Interest
Intergovernmental
Due from other funds
Total Assets
Liabilities and Fund Balances

Liabilities
Accounts payable
Accrued liabilities
Due to other funds
Deposits payable
Total Liabilities
Fund Balances
Restricted
Committed
Assigned
Unassigned
Total Fund Balances (Deficit)
Total Liabilities and Fund

Balances
$ 6,571,124
1,084,577
1,717,988
3,930
Parking
Special Revenue
Fund
698,086
698,086
647
1,382,042
$ 9,675,084
945,910
282,798
1,085,224
596,567
1,825,275
4,561,070
1,747,589
1,541,150
1,085,224
698,086
7,849,809
1,085,224
698,086
$ 9,675,084
1,085,224
18
698,086
Ambulance
Special Revenue
Fund
Total
Governmental
Funds
Other
Governmental
Funds
726,170
3,072,870
400,015
8,010
11,426,657
400,015
2,452,168
4,577
513,399
1,382,042
513,399
726,170
3,994,294
16,178,858
28,528
603
974,438
283,401
1,382,042
596,567
1,382,042
1,410,570
603
3,236,448
3,903,533
3,903,533
4,561,070
3,621,057
856,750
90,158
(684,400)
(684,400)
726,170
3,993,691
3,994,294
12,942,410
16,178,858
19
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20
Reconciliation of the Governmental Funds
Balance Sheet to the Statement of Net Position
June 30, 2015
Fund Balances - Total Governmental Funds
$ 12,942,410
Amounts reported for Governmental Activities in the Statement of Net Position

are different because:
Capital assets net of depreciation have not been included as financial
resources governmental fund activity.
39,246,893
Deferred outflows and inflows of resources relating to pensions: In governmental funds,

deferred outflows and inflows of resources relating to pensions are not reported because
they are applicable to future periods. In the statement of net position, deferred outflows
and inflows of resources relating to pensions are reported.
City's contributions subsequent to the measurement date
$
725,205
Adjustments due to differences in proportions
274,207
Differences between projected and actual earnings on pension plan investments
(3,730,545)
(2,731,133)
Long-term liabilities applicable to the City governmental activities are not
due and payable in the current period and accordingly are not reported
as fund liabilities. All liabilities, both current and long-term, are reported
in the Statement of Net Position.
Balances at June 30, 2015 are:
Sunset Center COP
Countywide radio project
Pension Obligation Bonds
Compensated absences
Net pension liability
Claims liabilities
Net OPEB obligation
$ (6,435,000)
(264,625)
(5,005,000)
(603,015)
(11,664,146)
(460,000)
(1,568,294)
Accrued interest payable from the current portion of interest due on bonds
payable has not been reported in the governmental funds.
Net Position of Governmental Activities
(26,000,080)
(41,060)
$ 23,417,030
21
Statement of Revenues, Expenditures, and Changes in Fund Balances
Governmental Funds
Harrison Memorial
Library
Special Revenue
Fund
General
Fund
Revenues
Taxes
Licenses and permits
Intergovernmental
Current services charges
Fines and forfeitures
Contributions
Other revenue
$ 14,702,528
504,419
161,620
256,097
9,246
1,988
17,603
686,025
249,537
Total Revenues
15,883,447
Expenditures
Current:
General government
Public safety
Public works
Forest, parks, and beaches
Capital outlay
Debt service:
Principal
705,616
3,586,911
1,637,602
5,255,170
1,260,593
544,902
766,242
315,780
2,396,667
Total Expenditures
1,231,357
15,763,867
Excess of Revenues Over (Under)

Expenditures
1,231,357
119,580
Other Financing Sources (Uses)

Transfers in
Transfers out
Total Other Financing
Sources (Uses)
Net Changes in Fund Balances
Fund Balances (Deficits), July 1, 2014
Prior Period Adjustments
(525,741)
2,073,032
(2,156,660)
948,596
(83,628)
948,596
35,952
422,855
7,133,421
662,369
698,086
662,369
698,086
680,436
Fund Balances (Deficits), July 1, 2014, restated

Fund Balances (Deficits), June 30, 2015
Parking
Special Revenue
Fund
7,813,857
$
7,849,809
22
1,085,224
698,086
Ambulance
Special Revenue
Fund
$
Other
Total
Governmental Governmental
Funds
Funds
$
40
630,476
2,718,256
215,838
874,152
1,350
109,906
630,516
1,139,090
3,919,502
21,139,081
6,183
3,593,094
1,637,602
6,398,876
1,284,030
544,902
1,999,728
315,780
2,396,667
4,616
23,437
2,129
1,046,128
360,610
1,046,128
360,610
1,443,103
19,577,417
(508,574)
2,476,399
1,561,664
493,384
(180,000)
1,412,923
(2,591,275)
4,927,935
(4,927,935)
313,384
(1,178,352)
(195,190)
1,298,047
1,561,664
(479,166)
2,707,630
10,722,340
1,139,090
(10,044)
(11,986)
(489,210)
$
$ 17,420,784
720,257
874,152
163,648
905,526
119,152
686,025
249,537
(684,400)
658,406
2,695,644
11,380,746
3,993,691
$ 12,942,410
23
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24
Reconciliation of the Statement of Revenues, Expenditures, and Changes in
Fund Balances of Governmental Funds to the Statement of Activities
Net change in fund balances - total governmental funds
$ 1,561,664
Amounts reported for governmental activities in the Statement of Activities are

different because:
Governmental funds report capital outlays as expenditures. However, in the
Statement of Activities the cost of those assets is allocated over their
estimated lives and reported as depreciation expense. This is the amount by
which capitalizable capital outlays exceeded depreciation in the current period.
Capital expenditures
Depreciation expense
$ 2,396,667
(1,427,665)
In governmental funds, pension costs are recognized when employer contributions are made.
In the statement of activities, pension costs are recognized on the accrual basis. This fiscal year,
the difference between accrual-basis pension costs and actual employer contribution was:
The issuance of long-term debt provided financial resources to
governmental funds, while the repayment of the principal of long-term debt
consumes the current financial resources of governmental funds. Neither
transaction, however, has any effect on net position. Also, governmental
funds report the effect of premiums, discounts and similar
items when the debt is first issued, whereas these amounts are deferred and
amortized in the Statement of Activities. This amount is the net effect of
this difference in the treatment of long-term debt and related items:
Principal payments
Net change in OPEB
969,002
(189,229)
1,046,128
(234,988)
811,140
Some expenses reported in the Statement of Activities do not require the

use of current financial resources and therefore are not reported as
expenditures in the governmental funds (net change):
Interest expense
Compensated absence expenses reported in the Statement of Activities
do not require the use of current financial resources and, therefore, are not
reported as expenditures in governmental funds (net change).
Change in net position of governmental activities
(4,433)
(134,064)
$ 3,014,080
25
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26
City of Carmel-by-the-Sea
Notes to Basic Financial Statements
June 30, 2015
Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The basic financial statements of the City of Carmel-by-the-Sea (the City) have been prepared in
accordance with accounting principles generally accepted in the United States of America (GAAP) as
applied to governmental units. The Governmental Accounting Standards Board (GASB) is the
standard-setting body for governmental accounting and financial reporting.
A. Description of Reporting Entity
The City of Carmel-by-the-Sea, California was incorporated on October 31, 1916, under the laws and
regulations of the State of California (State). The City operates under a City Council/Manager form of
government and provides the following services: public works, planning and building, general
administrative services, public safety, and fire suppression and prevention services.
The City operates as a self-governing local government unit within the State. It has limited authority to
levy taxes and has the authority to determine user fees for the services that it provides. The Citys main
funding sources include sales taxes, other intergovernmental revenue from state and federal sources,
user fees, and federal and state financial assistance. All property taxes are paid to Monterey County
(County) as part of the revenue neutrality payment obligation. The financial statements do not reflect
the amounts received on behalf of the City and retained by the County.
The financial reporting entity consists of (a) the primary government, the City, (b) organizations for
which the primary government is financially accountable, and (c) other organizations for which the
primary government is not accountable, but for which the nature and significance of their relationship
with the primary government are such that exclusion would cause the reporting entitys
financial statements to be misleading or incomplete. Financial accountability is defined as the
appointment of a voting majority of the component units board, and either (a) the City has the ability
to impose its will on the organization, or (b) there is a potential for the organization to provide a
financial benefit to or impose a financial burden on the City.
As required by GAAP, these financial statements present the government and its component
units, entities for which the government is considered to be financially accountable. These component
units are reported on a blended basis. Blended component units, although legally separate entities, are,
in substance, part of the governments operations and so data from these units are combined with data
of the primary government. The financial statements of the individual component units, if applicable
as indicated below, may be obtained by writing to the City of Carmel-by-the-Sea, Finance
Department, Post Office Box CC, Carmel-by-the-Sea, CA 93921.
The Citys reporting entity includes the following blended component units:
Carmel Public Improvement Authority

Harrison Memorial Library
The above component units are included in the Citys basic financial statements using the
blended method. There are no component units of the City that meet the criteria for discrete
presentation.
27
June 30, 2015
Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

B. Basis of Accounting and Measurement Focus
The accounts of the City are organized on the basis of funds, each of which is considered a separate
accounting entity. The operations of each fund are accounted for with a separate set of self-balancing
accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses as
appropriate. Government resources are allocated to and accounted for in individual funds based upon
the purpose for which they are to be spent and the means by which spending activities are controlled.
Government-Wide Financial Statements
The Citys government-wide financial statements include a Statement of Net Position and a Statement
of Activities. These statements report information on all of the activities of the primary government.
The government-wide financial statements are presented on an economic resources measurement
focus and the accrual basis of accounting. Accordingly, all of the Citys assets and liabilities,
including capital assets and related infrastructure assets and long-term liabilities, are included in the
accompanying Statement of Net Position. The Statement of Activities presents changes in net
position. Under the accrual basis of accounting, revenues are recognized in the period in which they
are earned while expenses are recognized in the period in which the liability is incurred.
Certain types of transactions are reported as program revenues for the City in three categories:
Charges for services
Operating grants and contributions
Capital grants and contributions
Certain eliminations have been made as prescribed by GASB Statement No. 34 in regard to interfund
activities, payables, and receivables.
Governmental Fund Financial Statements
Governmental fund financial statements include a Balance Sheet and a Statement of Revenues,
Expenditures, and Changes in Fund Balances for all major governmental funds and other
governmental funds aggregated. Accompanying reconciliations are presented to explain the
differences in net position as presented in these statements to the net position presented in the
government-wide financial statements.
All governmental funds are accounted for on a spending or current financial resources measurement
focus and the modified accrual basis of accounting. Accordingly, only current assets and current
liabilities are included on the Balance Sheet. The Statement of Revenues, Expenditures, and Changes
in Fund Balances present increases (revenues and other financing sources) and decreases
(expenditures and other financing uses) in net current assets. Under the modified accrual basis of
accounting, revenues are recognized in the accounting period in which they become both measurable
and available to finance expenditures of the current period.
28
June 30, 2015

B. Basis of Accounting and Measurement Focus (Continued)
Governmental Fund Financial Statements (Continued)
Revenues are recorded when received in cash, except those revenues subject to accrual (generally 60
days after year-end) and recognized when due. The primary revenue sources, which have been treated
as susceptible to accrual by the City, are property taxes, sales taxes, intergovernmental revenues, and
other taxes. Expenditures are generally recorded in the accounting period in which the related fund
liability is incurred, except for principal and interest on long-term liabilities, and compensated
absences which are recognized as expenditures only when payment is due.
Deferred revenues arise when potential revenues do not meet both the measurable and available
criteria for recognition in the current period. Deferred revenues also arise when the government
receives resources before it has a legal claim to them, as when grant monies are received prior to
incurring qualifying expenditures. In subsequent periods, when both revenue recognition criteria are
met or when the government has a legal claim to the resources, the deferred revenue is removed from
the balance sheet and revenue is recognized.
The funds designated as major funds are determined by a mathematical calculation consistent with
GASB Statement No. 34. The City has elected to report the Parking Special Revenue Fund as a major
fund. The City reports the following major governmental funds:
The General Fund is used to account for all of the general operations and other financial transactions
of the City, which are not accounted for by another fund.
The Harrison Memorial Library Special Revenue Fund is used to account for activities associated with
the Harrison Memorial Library.
The Parking Special Revenue Fund is used to account for activities associate with parking in-lieu fees.
The Ambulance Special Revenue Fund is used to account with ambulance service billings, which
have been outsourced to a third party.
Additionally, the City reports the following fund types:
The Special Revenue Funds are used to account for the proceeds of specific revenue sources (other
than for debt service) that are restricted by law or administrative action or committed to expenditures
for specified purposes.
The Debt Service Fund is used to account for and report financial resources that are restricted,
committed, or assigned for the repayment of long-term debt principal, interest, and related costs.
The reconciliations of the Governmental Fund financial statements to the Government-Wide financial
statements are provided to explain the differences created by the integrated approach of GASB No.
34.
29
June 30, 2015

C. Assets, Deferred Outflows, Liabilities, Deferred Inflows, and Net Position or Equity
Cash and Cash Equivalents
The Citys cash and cash equivalents are considered to be cash on hand, demand deposits, and
short-term investments with original maturities of three months or less from the date of acquisition.
The City pools cash and investments from all funds for the purpose of increasing income
through investment activities. Highly liquid money market investments with maturities of one year or
less at time of purchase are stated at amortized cost. All other investments are stated at fair value
in accordance with GASB Statement No. 31, Accounting and Financial Reporting for Certain
Investments and for External Investment Pools. Market value is used as fair value for those securities
for which market quotations are readily available.
Receivables
In the government-wide statements, receivables consist of all revenues earned at year-end and not yet
received. Major receivable balances for the governmental activities include property taxes, sales and
use taxes, utility user taxes, intergovernmental subventions, interest earnings, and expense
reimbursements.
In the fund financial statements, material receivables in governmental funds include revenue accruals
such as property tax, sales tax, utility user tax, and intergovernmental subventions since they
are usually both measurable and available. Non-exchange transactions collectible but not available,
such as property tax, are deferred in the fund financial statements in accordance with the modified
accrual basis, but not deferred in the government-wide financial statements in accordance with
the accrual basis.
Interest and investment earnings are recorded when earned only if paid within 60 days since
they would be considered both measurable and available. The loans receivable are recorded in the
fund statements, but are deferred to indicate they do not represent current financial resources. The
loans are recognized when advanced in the government-wide statements. The Citys experience is
that all accounts receivable are collectible; therefore an allowance for doubtful accounts is
unnecessary.
The County of Monterey is responsible for the collection and allocation of property taxes. Under
California law, property taxes are assessed and collected by the County up to 1% of the full cash value
of taxable property, plus other increases approved by the voters and distributed in accordance with
statutory formulas. The City recognizes property taxes when the individual installments are due,
provided they are collected within 60 days after year-end.
30
June 30, 2015

C. Assets, Deferred Outflows, Liabilities, Deferred Inflows, and Net Position or Equity (Continued)
Receivables (Continued)
Secured property taxes are levied on or before the first day of September of each year. They become
a lien on real property on March 1 preceding the fiscal year for which taxes are levied. These taxes are
paid in two equal installments; the first is due November 1 and is delinquent with penalties after
December 10; the second is due February 1 and delinquent with penalties after April 10. Secured
property taxes, which are delinquent and unpaid as of June 30, are declared to be tax defaulted and are
subject to redemption penalties, cost, and interest when paid. If the delinquent taxes are not paid at
the end of five years, the property is sold at public auction and the proceeds are used to pay the
delinquent amounts due. Any excess is remitted, if claimed, to the taxpayer. Additional tax liens are
created when there is a change in ownership of property or upon completion of new construction. Tax
bills for these new tax liens are issued throughout the fiscal year and contain various payments and
delinquent dates, but are generally due within one year. If the new tax liens are lower, the taxpayer
receives a tax refund rather than a tax bill. Unsecured personal property taxes are not a lien against
real property. These taxes are due on March 1 each year and are delinquent, if unpaid, on August 31.
The County apportions secured property tax revenue in accordance with the alternate methods of
distribution, the Teeter Plan, as described by Section 4717 of the California Revenue and Taxation
code. Therefore, the City receives 100 percent of the secured property tax levies to which it is
entitled, whether or not collected. Unsecured delinquent taxes are considered fully collectible.
Interfund Receivables and Payables
During the course of operations, numerous transactions occur between individual funds that may
result in amounts owed between funds. Those related to goods and services type transactions are
classified as due to and from other funds. Long-term interfund loans (noncurrent portion) are
reported as advances from and to other funds. Interfund receivables and payables between
funds within governmental activities are eliminated in the Statement of Position. See Note 4 for
details of interfund transactions, including receivables and payables at year-end.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items in both government-wide and fund financial statements. In the governmental fund
financial statements, prepaid items are offset as nonspendable fund balance for long-term assets to
indicate they do not constitute current resources available for appropriation.
Capital Assets
The City's assets are capitalized at historical cost or estimated historical cost, if actual is unavailable,
except for donated Capital Assets which are recorded at their estimated fair value at the date
of donation. Policy has set the capitalization threshold for reporting at $5,000 for
non-infrastructure capital assets and $25,000 for infrastructure capital assets.
31
June 30, 2015

Capital Assets (Continued)
Government-Wide Statements
Public domain (infrastructure) capital assets include roads, bridges, curbs and gutters, streets,
sidewalks, drainage systems, and lighting systems.
The accounting treatment of property, plant and equipment (capital assets) depends on whether
the assets are used in governmental fund operations or proprietary fund operations and whether they
are reported in the government-wide or fund financial statements.
Prior to July 1, 2003, governmental funds infrastructure assets were not capitalized, since then these
assets have been valued at estimated historical cost.
Depreciation of all exhaustible capital assets is recorded as an allocated expense in the Statement of
Activities, with accumulated depreciation reflected in the Statement of Net Position. Depreciation is
provided over the assets estimated useful lives using the straight-line method of depreciation.
No depreciation is recorded in the year of acquisition or in the year of disposition.
The range of estimated useful lives by type of asset is as follows:
Buildings and improvements: 20 50 years
Infrastructure: 30 years
Vehicles, machinery, and equipment: 5 - 20 years
Computer Software: 10 years
Fund Financial Statements
In the fund financial statements, capital assets used in governmental fund operations are accounted for
as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in
proprietary fund operations are accounted for the same way as in the government-wide statements.
Claims and Judgments
The City records a liability for claims, judgments, and litigation when it is probable that an asset has
been impaired or a liability has been incurred prior to fiscal year-end and the probable amount of loss
(net of any insurance coverage) can be reasonably estimated.
The City is exposed to various risks of losses related to torts; theft of, damages to, and destruction of
assets; errors and omissions; injuries to employees; and natural disasters. The City participates in a
number of federal and state assisted grant programs. These programs are subject to program
compliance audits by the grantors. The amount, if any, of expenditures which may be disallowed by
the granting agencies cannot be determined at this time although the City expects such amounts, if
any, to be immaterial.
32
June 30, 2015

Deferred Outflows
Pursuant to GASB Statement No. 65 the City recognizes deferred outflows of resources. A deferred
outflow of resources is defined as a consumption of net position by the government that is applicable
to a future reporting period. Refer to Note 7 for a detailed listing of the deferred outflows of resources
that the City has recognized.
Deferred Inflows
Pursuant to GASB Statement No. 65 the City recognizes deferred inflows of resources. A deferred
inflow of resources is defined as an acquisition of fund balance or net position by the government that
is applicable to a future reporting period. Refer to Note 7 for a detailed listing of the deferred inflows
of resources that the City has recognized.
Compensated Absences
Employees accrue vacation, sick, holiday, and compensatory time off benefits. City employees have
vested interests in the amount of accrued time off, with the exception of sick time, and are paid on
termination. Also, annually an employee may elect to be compensated for up to 40 hours of unused
annual leave. However, this is contingent upon the employee using at least 40 hours during the
previous year and, the employee having a minimum balance of 80 annual leave hours after the
payment. All vacation pay is accrued when incurred in the government-wide and proprietary financial
statements. A liability for these amounts is reported in the governmental funds only if they
have matured, for example, as a result of employee resignations or retirements and is currently
payable. The City had no employee resignations or retirements for which compensated absences
should be accrued in governmental funds at year-end. The general fund is typically used to liquidate
compensated absences.
Fund Balance
In the fund financial statements, governmental funds report fund balance as nonspendable, restricted,
committed, assigned, or unassigned based primarily on the extent to which the City is bound to honor
constrains on how to specific amounts can be spent.
Nonspendable fund balance - that portion of a fund balance that includes amounts that cannot
be spent because they are either not in a spendable form, such as prepaid items, inventories, or
loans receivable.
Restricted fund balance - that portion of a fund balance that reflects constraints placed on the
use of resources (other than non-spendable items) that are either (a) externally imposed by
creditors (such as through debt covenants, grantors, contributors, or laws or regulations of
other governments); or (b) imposed by law through constitutional provisions or enabling
legislation. Examples of restricted fund balances include Street Maintenance, Library, and
debt service funds.
Committed fund balance - that portion of a fund balance that included amounts that can only
be used for specific purposes pursuant to constraints imposed by formal action of the
governments highest level of decision-making authority, and remain binding unless removed
in the same manner.
33
June 30, 2015

Fund Balance (Continued)
a) The City Council, as the Citys highest level of decision-making authority, may commit
fund balance for specific purposes pursuant to constraints imposed by formal action taken
such as resolution.
b) These committed amounts cannot be used for any other purpose unless the City Council
removes or changes the specified use through the same type of formal action taken to
establish the commitment
c) City Council action to commit fund balance needs to occur within the fiscal reporting
periods; however the amount can be determined subsequently.
Assigned fund balance amounts that are constrained by the Citys intent to be used for
specific purposes, but are neither Restricted nor Committed, should be reported as Assigned
fund balance. This policy hereby delegated the authority to assign amounts to be used for
specific purposes to the City Manager for the purpose of reporting these amounts in the Citys
annual financial statements.
Unassigned fund balance these are residual positive net resources in excess of what can
properly be classified in one of the other four categories and do not have any specific
spending limitations. The General Fund is the only fund that should report this category of
fund balance.
Fund Balance Policy

The accounting policies of the City consider restricted fund balance to have been spent first when an
expenditure is incurred for which both restricted and unrestricted fund balance is available. Similarly,
when an expenditure is incurred for purposes for which amounts in any of the unrestricted
classifications of fund balance could be used, the City considers committed amounts to be reduced
first, followed by assigned amounts and then unassigned amounts.
Fund balances of the governmental funds are reported separately within classifications based on a
hierarchy of constraints placed on the use of those resources. The classifications are based on the
relative strength of the constraints that control how the specific amounts can be spent. The
classifications are nonspendable, restricted, committed, assigned, and unassigned fund balance. The
nonspendable fund balance classification includes amounts that cannot be spent because they are
either not in spendable form or are legally or contractually required to be maintained intact. Restricted
fund balances are those that have externally imposed restrictions on their usage by creditors, such as
through debt covenants, grantors, contributors, or laws and regulations. Assigned fund balances
include amounts that are constrained by the Citys intent to be used for specific purposes.
When both restricted and unrestricted resources are available for use, it is the Citys policy to use
restricted resources first, followed by the unrestricted, committed, assigned, and unassigned resources
as they are needed.
34
June 30, 2015

Net Position
The Citys financial statements are presented in accordance with the provisions of Governmental
Accounting Standards Board Statement (GASB) No. 34, Basic Financial Statements and
Managements Discussion and Analysis for State and Local Governments and GASB Statement No.
63 Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net
Position Statement No. 34 established standards for external financial reporting for all state and local
governmental entities and Statement No. 63 establishes standards for reporting deferred outflows of
resources, deferred inflow of resources, and net position in a statement of financial position. The net
position is required to classify into three components net investment in capital assets; restricted; and
unrestricted. These captions apply only to Net Position as determined at the Government-wide level,
and are described below:
Net Investment in Capital Assets describes the portion of Net Position which is represented by the
current net book value of the Citys capital assets, less the outstanding balance of any debt issued to
finance these capital assets.
Restricted describes the portion of Net Position which is restricted as to use by the terms and
conditions of agreements with outside parties, governmental regulations, laws, or other restrictions
which the City cannot unilaterally alter.
Unrestricted describes the portion of Net Position which is not restricted as to use.
Restricted net position consists of assets that are subject to constraints either (1) externally imposed
by creditors (such as debt covenants), grantors, contributors, or laws or regulation of other
governments or (2) imposed by law through constitutional provisions or enabling legislation. There
were no assets at June 30, 2015 that were restricted by enabling legislation.
D. Post-Employment Health Care Benefits
The City provides health care benefits for its retirees. Substantially all of the Citys employees may
become eligible for these benefits if they reach normal retirement age, have five years of CalPERS
service, are eligible for medical coverage, and have actually retired from the City. See Note 8 for
further information.
E. Revenues, Expenditures, and Expenses
Property Tax
The County of Monterey (County) is responsible for the collection and allocation of property taxes.
Under California law, property taxes are assessed and collected by the County up to 1% of the full
cash value of taxable property, plus other increases approved by the voters and distributed in
accordance with statutory formulas. The City recognizes property taxes when the individual
installments are due, provided they are collected within 60 days after year-end.
35
June 30, 2015

E. Revenues, Expenditures, and Expenses (Continued)
Interfund Transfers
Resources are reallocated between funds by reporting them as interfund transfers. For the purposes of
the Statement of Activities, all interfund transfers between individual governmental funds have been
eliminated.
F. New Accounting Pronouncements
The City has implemented the requirements of Governmental Accounting Standards Board (GASB)
Statements No. 68 and 71 during the fiscal year ended June 30, 2015.
Governmental Accounting Standards Board Statement No. 68
For the fiscal year ended June 30, 2015, the City implemented Governmental Accounting Standards
Board (GASB) Statement No. 68, Accounting and Financial Reporting for Pensions. This Statement
is effective for periods beginning after June 15, 2014. The objective of this Statement is to improve
accounting and financial reporting by state and local governments for pensions. This Statement
replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local
Governmental Employers as well as the requirements of Statement No. 50, Pension Disclosures. This
Statement establishes standards for measuring and recognizing liabilities, deferred outflows of
resources, deferred inflows of resources, and expenses related to pensions. Implementation of GASB
Statement No. 68 did have an impact on the Citys financial statements for the fiscal year ended June
30, 2015, see Note 7 and Note 11.
For the fiscal year ended June 30, 2015, the City implemented Governmental Accounting Standards
Board (GASB) Statement No. 71, Pension Transition for Contributions Made Subsequent to the
Measurement Date. This Statement is effective for periods beginning after June 15, 2014. The
objective of this Statement is to address an issue regarding application of the transition of GASB
Statement No. 68, Accounting and Financial Reporting for Pensions. The issue relates to amounts
associated with contributions, if any, made by a state or local government employer or non-employer
contributing entity to a defined benefit pension plan after the measurement date of the governments
beginning net pension liability. This statement will eliminate the source of potential significant
understatement of restated beginning net position and expense in the first year of implementation of
GASB Statement No. 68 in the accrual-basis financial statements of employers and non-employer
contributing entities. Implementation of the GASB Statement No. 71 did have an impact on the Citys
financial statements for the fiscal year ended June 30, 2015, see Note 7 and Note 11.
G. Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the
date of the financial statements and the reported amounts of revenues and expenditures during the
reporting period. Actual results could differ from those estimates and assumptions.
36
June 30, 2015
Note 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY

A. Budgets and Budgetary Accounting
The City follows these procedures in establishing the budgetary data reflected in the financial
statements:
The City Council establishes budgets for the General Fund and all Special Revenue Funds, except for
certain Special Revenue Funds for which expenditures are controlled by grant funding or by
assessments received. Budgetary control is legally maintained at the fund level for these funds.
Department heads submit budget requests to the City Manager. The City Manager prepares an
estimate of revenues and prepares recommendations for the next years budget. The preliminary
budget may or may not be amended by the City Council and is adopted by resolution by the City
Council on or before June 30 in accordance with the municipal code.
The City Council may amend the budget by motion during the fiscal year. Only the Council
can authorize transfers between funds and approve inter-fund loans. The City Manager is
authorized to transfer budgeted amounts within a fund without formal council action or approval. The
City Manager is authorized to increase expenditures in relation to revenues in funds receiving
assigned revenues without approval by the City Council.
Expenditures may not legally exceed appropriations at the fund level, which is the legal level
of control. Supplemental appropriations, which increase appropriations, may be made during the
fiscal year. There were no material supplemental appropriations made for the fiscal year ended
June 30, 2015. The budget information is presented on a basis consistent with generally
accepted accounting principles. Appropriations, except open project appropriations, and unexpended
grant appropriations, lapse at the end of each fiscal year. The City did not adopt a budget for the
Parking Fund for the fiscal year ended June 30, 2015.
Under Article XIIIB of the California Constitution (the Gann Spending Limitation Initiative), the City
is restricted as to the amount of annual appropriations from proceeds of taxes, and if proceeds of taxes
exceed allowed appropriations, the excess must either be refunded to the State Controller or returned
to the taxpayers through revised tax rates or revised fee schedules, or an excess in one year may be
offset against a deficit in the following year. For the fiscal year ended June 30, 2015, based on
calculations by City management, proceeds of taxes did not exceed appropriations.
37
June 30, 2015
Note 2 STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY (CONTINUED)

B. Deficit Fund Balance/Net Position in Individual Funds
The Ambulance major special revenue fund has a deficit fund balance of $684,400. It is the Citys
expectation that fund balance of the general fund will be used to alleviate this deficit.
C. Excess of Expenditures over Appropriations by Department in Individual Funds
Fund
General Fund:
General government
Nonmajor Funds:
Traffic Safety
Forest Theater
Gas Tax
Expenditures
$
3,586,911
1,637,602
Appropriations
$
3,124,839
950,650
Excess
$
4,616
2,129
23,437
462,072
686,952
4,616
2,129
23,437
Note 3 CASH AND INVESTMENTS

Cash and Investments
The following is a summary of cash and investments at June 30, 2015:
Pooled cash and investments - statement of net position

Cash and investments with fiscal agent - statement of net position
Total cash and investments
11,426,657
400,015
11,826,672
Cash and investments as of June 30, 2015 consist of the following:
Cash on hand
Demand deposits
Investments
Total cash and investments
1,335
2,858,645
8,966,692
11,826,672
The City follows the practice of pooling cash and investments of all funds except for funds required to be
held by fiscal agents under provisions of bond indentures. Interest income earned on pooled cash and
investments is allocated monthly to the various funds based on monthly cash and investment balances.
Interest income from cash and investments with fiscal agents is credited directly to the related fund.
38
June 30, 2015
Note 3 CASH AND INVESTMENTS (CONTINUED)

Investments Authorized by the California Government Code and the Citys Investment Policy
The table below identifies the investment types that are authorized for the City by the California
Government Code (or the Citys investment policy, where more restrictive). The table also identifies
certain provisions of the California Government Code (or the Citys investment policy, where more
restrictive) that address interest rate risk, credit risk, and concentration of credit risk. This table does not
address investments of debt proceeds held by bond trustees that are governed by the provisions of bond
indentures of the City, rather than the general provisions of the California Government Code or the Citys
investment policy.
Authorized Investment Type
United States (U.S.) Treasury Issues
U.S. Government Agency Securities
California State and Local Bonds, Notes, & Warrants
Bankers Acceptance
Commercial Paper
Medium Term Corporate Notes
Negotiable Certificates of Deposit
Repurchase Agreements
Passbook Savings/Money Market
Local Agency Investment Fund (LAIF)
Federal Instrumentalities
39
Maximum
Maturity
Maximum
Percentage
of Portfolio*
Maximum
Investment
in One Issuer
5 years
5 years
None
180 days
270 days
5 years
5 years
92 days
None
N/A
None
None
50%
None
40%
15%
30%
30%
None
20%
None
None
None
50%
None
30%
10%
30%
30%
None
10%
None
None
June 30, 2015

Investments Authorized by Debt Agreements
Investments of debt proceeds held by bond trustees are governed by provisions of the debt agreements,
rather than the general provisions of the California Government Code or the Citys investment policy.
Authorized Investment Type
Maximum
Maturity
Maximum
Percentage
of Portfolio*
Maximum
Investment
in One Issuer
United States (U.S.) Treasury Issues

U.S. Government Agency Securities
Banker's Acceptance
Commercial Paper
Money Market Funds
Investment Agreements
Local Agency Bonds
Medium Term Notes
Negotiable Certificate of Deposits
Local Agency Investment Fund (LAIF)
None
None
360 days
270 days
None
None
None
None
None
N/A
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
None
Disclosures Relating to Interest Rate Risk

Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of an
investment. Generally, the longer the maturity of an investment, the greater the sensitivity of its fair value
to changes in market interest rates. One of the ways that the City manages its exposure to interest rate risk
is by purchasing a combination of shorter term and longer term investments and by timing cash flows
from maturities so that a portion of the portfolio is maturing or coming close to maturity evenly over time
as necessary to provide the cash flow and liquidity needed for operations.
Information about the sensitivity of the fair values of the Citys investments (including investments held
by bond trustees) to market interest rate fluctuations is provided by the following table that shows the
distribution of the Citys investments by maturity:
Remaining Maturity (in Months)
Investment Type
State investment pool
Money market funds
Certificates of deposit
Held by bond trustees:
Money market funds
Totals
$ 6,474,524
99,153
1,993,000
12 Months
Or Less
$ 6,474,524
99,153
498,000
400,015
400,015
$ 8,966,692 $ 7,471,692
40
13 to 24
Months
$
-
25-36
Months
$
-
1,245,000
250,000
$ 1,245,000
$ 250,000
37-48
Months
$ -
49-60
Months
$ -
More Than
60 Months
$
-
June 30, 2015

Disclosures Relating to Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the holder of
the investment. This is measured by the assignment of a rating by a nationally recognized statistical rating
organization. Presented below is the minimum rating required by (where applicable) the California
Government Code, the Citys investment policy, or debt agreements, and the actual rating, by Standards
and Poor, as of fiscal year end for each investment type:
Rating as of Fiscal Year End
Amount
Minimum
Legal
Rating
$ 6,474,524
99,153
1,993,000
None
None
None
400,015
None
Investment Type
State investment pool
Money market funds
Certificates of deposit
Held by bond trustees:
Money market funds
Total
8,966,692
Exempt
From
Disclosure
$
AAA
$
99,153
AA
$ -
A
$ -
Not
Rated
$ 6,474,524
1,993,000
400,015
$
$ 499,168
$ -
$ -
$ 8,467,524
Concentration of Credit Risk

As of June 30, 2015, the City has not invested more than 5% of its total investments in any one issuer.
Investments in external investment pools are excluded from this requirement.
Custodial Credit Risk
Custodial credit risk for deposits is the risk that, in the event of the failure of a depository financial
institution, a government will not be able to recover its deposits or will not be able to recover collateral
securities that are in the possession of an outside party. The custodial credit risk for investments is the risk
that, in the event of the failure of the counterparty (e.g., broker-dealer) to a transaction, a government will
not be able to recover the value of its investment or collateral securities that are in the possession of
another party. The California Government Code requires that a financial institution secure deposits made
by state or local governmental units by pledging securities in an undivided collateral pool held by a
depository regulated under state law (unless so waived by the governmental unit). The fair value of the
pledged securities in the collateral pool must equal at least 110% of the total amount deposited by the
public agencies. California law also allows financial institutions to secure deposits by pledging first trust
deed mortgage notes having a value of 150% of the secured public deposits. The Citys investment policy
does not contain any additional provisions that would limit the exposure to custodial credit risk for
deposits.
However, the policy does stipulate that mortgage collateral cannot be used to secure deposits, and that the
use of a third party bank trust department is to act as the Citys safekeeping agent for investments. At June
30, 2015, the Citys deposits (bank balances) were insured by the Federal Depository Insurance
Corporation or collateralized as required under California Law.
41
June 30, 2015

Investment in State Investment Pool
The City is a voluntary participant in the Local Agency Investment Fund (LAIF) that is regulated by
California Government Code Section 16429 under the oversight of the Treasurer of the State of
California. The fair value of the Citys investment in this pool is reported in the accompanying financial
statements at amounts based upon the Citys pro-rata share of the fair value provided by LAIF for the
entire LAIF portfolio (in relation to the amortized cost of that portfolio). The balance available for
withdrawal is based on the accounting records maintained by LAIF, which are recorded on an amortized
cost basis.
Note 4 INTERFUND TRANSACTIONS
Receivables/Payables
The following sets forth amounts due to/from funds. These amounts represent when one fund reflects a
deficit in its pooled cash account, generated from expenditures paid before revenue is received. These
amounts are short term loans and are expected to be repaid within the next fiscal year.
Due to/Due from Other Funds
Due From
Amount
Fund
Due to
Amount
Major Funds:
General Fund
1,382,042
1,382,042
Total
1,382,042
1,382,042
Transfers
With City Council approval, resources may be transferred from one City fund to another. The purposes of
the transfers are: to move revenues from the fund that statute or budget requires to collect them to the fund
that statue or budget requires to expend them; and use unrestricted revenues collected in the general fund
to finance various programs accounted for in other funds in accordance with budgetary authorizations.
42
June 30, 2015
Note 4 INTERFUND TRANSACTIONS (CONTINUED)

Transfers (Continued)
Transfers between individual funds during the fiscal year ended June 30, 2015, were as follows:
Transfer In
Transfer Out
$ 2,073,032
948,596
493,384
$ 2,156,660
Major Governmental Funds:

General Fund
Harrison Memorial Library Special Revenue Fund
180,000
Nonmajor Governmental Funds:

Traffic Safety Special Revenue Fund
Road Impact Fees Special Revenue Fund
Grants Special Revenue Fund
Forest Theater Special Revenue Fund
Gas Tax Special Revenue Fund
Measure D Special Revenue Fund
General Debt Service Fund
100,000
215,000
301,702
90,000
93,871
1,790,702
1,412,923
Totals
$ 4,927,935
43
$ 4,927,935
June 30, 2015
Note 5 CAPITAL ASSETS

A. A summary of changes in the Governmental Activities capital assets for the fiscal year ended June 30,
2015 is as follows:
Balance at
July 1, 2014
Additions
Prior Period
Adjustments
Balance at
June 30, 2015
$ 1,467,918
(1,467,918)
32,436
32,436
Capital assets not being depreciated:

Land
Art
Construction in Progress
Total
3,633,723
1,467,918
219,284
5,320,925
1,412,347
1,412,347
5,101,641
1,664,067
6,765,708
Depreciable capital assets:

Infrastructure
Vehicles
Machinery & equipment
Total
26,989,208
13,760,000
2,498,253
2,362,456
45,609,917
23,967
810,803
118,974
30,576
984,320
Less accumulated depreciation for:

Infrastructure
Vehicles
Machinery & equipment
Total
(7,831,233)
(917,334)
(2,091,836)
(1,817,338)
(12,657,741)
(700,724)
(485,694)
(118,074)
(123,173)
(1,427,665)
4,790
4,790
(8,527,167)
(1,403,028)
(2,209,910)
(1,940,511)
(14,080,616)
Total capital assets,

being depreciated, net
32,952,176
(443,345)
(27,646)
32,481,185
Governmental activities
capital assets, net
$ 38,273,101
4,790
$ 39,246,893
969,002
(32,436)
(32,436)
26,980,739
14,570,803
2,617,227
2,393,032
46,561,801
Depreciation expense was charged to functions and programs based on their usage of the related
assets. The amounts allocated to each function or program were as follows:
Governmental Activities:
Administration
Public safety
Public works
Total
4,283
137,056
59,962
673,858
17,132
535,374
$ 1,427,665
44
June 30, 2015
Note 6 LONG-TERM LIABILITIES

The following is a summary of changes in Governmental Activities long-term debt for the fiscal year
ended June 30, 2015:
Balance at
July 1, 2014
Sunset Center COP
Countywide Radio Project
Capital Lease Obligations
Pension Obligation Bonds
Compensated Absences
Net Pension Liability
Claims Liabilities
Net OPEB Obligation
Total
Additions
6,725,000
303,366
137,387
5,585,000
468,951
415,435
460,000
1,333,306
$ 15,013,010
Prior Period
Adjustment
Deletions
(290,000)
(38,741)
(137,387)
(580,000)
(281,371)
(4,039,316)
282,709
(47,721)
698,144
$ (5,414,536)
Balance at
June 30, 2015
$
6,435,000
264,625
Due Within
One Year
$
295,000
18,379
585,000
361,809
15,703,462
5,005,000
603,015
11,664,146
460,000
1,568,294
$ 15,703,462
$ 26,000,080
$ 1,260,188
A. Certificates of Participation Sunset Center COP

In 2010, the Carmel Public Improvement Authority, a component unit of the City, refunded
previously issued Certificates of Participation in the amount of $7,485,000, bearing an average
interest rate of 4.73%, secured by general revenues of the City, and matures in October 2031. The
original proceeds were used to remodel the Sunset Cultural Center property. Interest is payable
semi-annually on October 1st and April 1st with principal payments due each October 1st. The
outstanding balance due at June 30, 2015 was $6,435,000.
Fiscal Years
Ended June 30,
2016
2017
2018
2019
2020
2021-2025
2026-2030
2031-2032
Totals
Principal
$
Interest
295,000
300,000
310,000
315,000
325,000
1,790,000
2,135,000
965,000
6,435,000
45
213,962
208,062
202,062
194,312
186,438
779,328
453,762
58,000
2,295,926
Total
$
508,962
508,062
512,062
509,312
511,438
2,569,328
2,588,762
1,023,000
8,730,926
June 30, 2015
Note 6 LONG-TERM LIABILITIES (CONTINUED)

B. Countywide Radio Project
In 2009, the City entered into a participation agreement with Monterey County to provide
funding related to the "Next Generation Radio Project," a Federal Communications Commission
mandated alteration of public safety and local government radio systems. Estimated payments will
change should individual local jurisdictions elect out of the project. The outstanding balance due at
June 30, 2015 was $264,625.
Fiscal Years
Ended June 30,
Principal
2016
2017
2018
2019
2020
2021-2025
2026-2030
Totals
Interest
18,379
19,105
19,860
20,645
21,460
120,705
44,471
264,625
Total
11,285
10,559
9,804
9,019
8,204
27,616
4,106
80,593
29,664
29,664
29,664
29,664
29,664
148,321
48,577
345,218
C. Capital Lease Vehicle

In 2009, the City entered into a lease purchase agreement to acquire firefighting equipment in
the amount of $435,982, bearing interest at 4.5%, secured by equipment, with interest and
principal payments due annually on July 1st, and matures in July 2015. The lease was paid in full
during the fiscal year ended June 30, 2015.
D. Pension Obligation Bonds
On November 29, 2012, the City issued $6,280,000 in 2012 Taxable Pension Obligation Bonds, the
purpose of which was to fund certain PERS side fund obligations. The bonds bear an interest rate of
0.55% to 3.1% and mature on June 1, 2023. The outstanding balance due at June 30, 2015 was
$5,005,000.
The annual minimum debt service requirements for these bonds are:
Fiscal Years
Ended June 30,
2016
2017
2018
2019
2020
2021-2023
Totals
Principal
$
Interest
585,000
595,000
605,000
615,000
625,000
1,980,000
5,005,000
46
112,444
105,130
96,206
85,618
73,010
119,196
591,604
Total
$
697,444
700,130
701,206
700,618
698,010
2,099,196
5,596,604
June 30, 2015
Note 6 LONG-TERM LIABILITIES (CONTINUED)

E. Compensated Absences
The City records employee absences, such as vacation, illness, and holidays, for which it is expected
that employees will be paid as compensated absences. Compensated absences had a balance of
$603,015 at June 30, 2015; of that amount $361,809 is expected to be paid within a year.
F. Net Pension Liability
In accordance with GASB Statement No. 68, the City has recorded its net pension liability of
CalPERS benefits for retirees. See Note 7 for further discussion on the net pension liability.
G. Claims Liabilities
The City has recorded a liability for potential claims in excess of amounts covered by the
insurance pool. See Note 10 for further discussion on the Citys risk management activities.
H. Net OPEB Obligation
A net OPEB obligation is the cumulative differences between annual OPEB cost and an employers
contributions to a plan. At June 30, 2015, the City had a Net OPEB Obligation of $1,568,294. See
Note 8 for further discussion on OPEB.
Note 7 PUBLIC EMPLOYEES RETIREMENT SYSTEM
For purposes of measuring the net pension liability and deferred outflows/inflows of resources related to pensions,
and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the
Plans fiduciary net position have been determined on the same basis as they are reported by CalPERS Financial
Office. For this purpose, benefit payments (including refunds of employee contributions) are recognized when
due and payable in accordance with the benefit terms. Investments are reported at fair value.
A. General Information about the Pension Plan
Plan Descriptions - All qualified employees are eligible to participate in the Citys pooled Safety (police and fire)
Plan, a cost-sharing multiple-employer defined benefit pension plan and the Citys Miscellaneous (all other) Plan,
a cost-sharing multiple-employer defined benefit pension plan administered by the California Public Employees'
Retirement System (CalPERS), which acts as a common investment and administrative agent for its participating
member employers. Benefit provisions under the Plan are established by State statute and Local Government
resolution. CalPERS issues publicly available reports that include a full description of the pension plan regarding
benefit provisions, assumptions and membership information that can be found on the CalPERS website.
Benefits Provided - CalPERS provides service retirement and disability benefits, annual cost of living adjustments
and death benefits to plan members, who must be public employees and beneficiaries. Benefits are based on years
of credited service, equal to one year of full time employment. Members with five years of total service are
eligible to retire at age 50 with statutorily reduced benefits. All members are eligible for non-duty disability
benefits after 10 years of service. The death benefit is one of the following: the Basic Death Benefit, the 1957
Survivor Benefit, or the Optional Settlement 2W Death Benefit. The cost of living adjustments for each plan are
applied as specified by the Public Employees' Retirement Law.
47
June 30, 2015
Note 7 PUBLIC EMPLOYEES RETIREMENT SYSTEM (CONTINUED)

A. General Information about the Pension Plan (Continued)
The Plans provisions and benefits in effect at June 30, 2015, are summarized as follows:
City M iscellaneous Plan
Tier I
Tier II
Tier III
Prior to April
15, 2012
On or after
April 15, 2012
On or after
January 1, 2013
2.0% @ 55
2.0% @ 60
2.0% @ 62
Benefit vesting schedule
5 years service
5 years service
5 years service
Benefit payments
Required employee contribution rates
monthly for life
monthly for life
monthly for life
7.000%
7.000%
6.250%
Required employer contribution rates
11.522%
8.005%
6.250%
Hire date
Benefit formula
City Safety Plan

Tier I
Tier II
Tier III
Prior to April
15, 2012
On or after
April 15, 2012
On or after
January 1, 2013
3.0% @ 50
2.0% @ 50
2.7% @ 57
Benefit vesting schedule
5 years service
5 years service
5 years service
Benefit payments
Required employee contribution rates
monthly for life
monthly for life
monthly for life
9.000%
9.000%
11.500%
Required employer contribution rates
27.849%
20.083%
11.500%
Hire date
Benefit formula
Contributions - Section 20814(c) of the California Public Employees' Retirement Law requires that the employer
contribution rates for all public employers be determined on an annual basis by the actuary and shall be effective
on the July l following notice of a change in the rate. Funding contributions for the Plan is determined annually on
an actuarial basis as of June 30 by CalPERS. The actuarially determined rate is the estimated amount necessary to
finance the costs of benefits earned by employees during the year, with an additional amount to finance any
unfunded accrued liability. The City is required to contribute the difference between the actuarially determined
rate and the contribution rate of employees.
B. Net Pension Liability
The Citys net pension liability for the Plans is measured as the proportionate share of the net pension liability.
The net pension liability of each of the Plans is measured as of June 30, 2014, using an annual actuarial valuation
as of June 30, 2013 rolled forward to June 30, 2014 using standard update procedures. The Citys proportion of
the net pension liability of the Miscellaneous and Safety Plan was based on a projection of the Citys long-term
share of contributions to the pension plans relative to the projected contributions of all participating employers,
actuarially determined. The Citys proportionate share of the net pension liability for the Miscellaneous and
Safety Plans as of June 30, 2013 and June 30, 2014 was as follows:
48
June 30, 2015

B. Net Pension Liability (Continued)
Miscellaneous Plan
Proportion - June 30, 2013
0.25518%
Proportion - June 30, 2014
0.24760%
Change - Increase (Decrease)
-0.00758%
Public Safety Plan

0.15346%
0.14782%
-0.00564%
A summary of principal assumptions and methods used to determine the net pension liabilities is shown below.
Actuarial Assumptions - The total pension liability in the June 30, 2013 actuarial valuation was determined using
the following actuarial assumptions:
M iscellaneous
Safety
June 30, 2013
June 30, 2013
June 30, 2014
June 30, 2014
Entry-Age Normal Cost M ethod
Valuation Date
M easurement Date
Actuarial Cost M ethod
Actuarial Assumptions:
Discount Rate
Inflation
Payroll Growth
Projected Salary Increase
Investment Rate of Return
M ortality
7.50%
2.75%
3.00%
Varies (1)
7.50% (2)
7.50%
2.75%
3.00%
Varies (1)
7.50% (2)
Derived using CalPERS' M embership

Data for all Funds
(1) Depending on age, service, and type of employment.
(2) Net of pension plan investment expenses, including inflation.
The underlying mortality assumptions and all other actuarial assumptions used in the June 30, 2013 valuation
were based on the results of a January 2014 actuarial experience study for the period 1997 to 2011. Further details
of the Experience Study can found on the CalPERS website.
Discount Rate - The discount rate used to measure the total pension liability was 7.50% for each Plan. To
determine whether the municipal bond rate should be used in the calculation of a discount rate for the plan,
CalPERS stress tested plans that would most likely result in a discount rate that would be different from the
actuarially assumed discount rate. Based on the testing, none of the tested plans run out of assets. Therefore, the
current 7.50 percent discount rate is adequate and the use of the municipal bond rate calculation is not necessary.
The long term expected discount rate of 7.50 percent will be applied to all plans in the Public Employees
Retirement Fund (PERF). The stress test results are presented in a detailed report that can be obtained from the
CalPERS website.
According to Paragraph 30 of Statement 68, the long-term discount rate should be determined without reduction
for pension plan administrative expense. The 7.50 percent investment return assumption used in this accounting
valuation is net of administrative expenses. Administrative expenses are assumed to be 15 basis points. An
investment return excluding administrative expenses would have been 7.65 percent. Using this lower discount
rate has resulted in a slightly higher Total Pension Liability and Net Pension Liability. CalPERS checked the
materiality threshold for the difference in calculation and did not find it to be a material difference.
49
June 30, 2015

B. Net Pension Liability (Continued)
CalPERS is scheduled to review all actuarial assumptions as part of its regular Asset Liability Management
(ALM) review cycle that is scheduled to be completed in February 2018. Any changes to the discount rate will
require Board action and proper stakeholder outreach. For these reasons, CalPERS expects to continue using a
discount rate net of administrative expenses for GASB 67 and 68 calculations through at least the 2017-18 fiscal
year. CalPERS will continue to check the materiality of the difference in calculation until such time as we have
changed our methodology.
The long-term expected rate of return on pension plan investments was determined using a building-block method
in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan
investment expense and inflation) are developed for each major asset class.
In determining the long-term expected rate of return, CalPERS took into account both short-term and long-term
market return expectations as well as the expected pension fund cash flows. Using historical returns of all the
funds' asset classes, expected compound returns were calculated over the short-term (first 10 years) and the
long-term (11-60 years) using a building-block approach. Using the expected nominal returns for both short-term
and long-term, the present value of benefits was calculated for each fund. The expected rate of return was set by
calculating the single equivalent expected return that arrived at the same present value of benefits for cash
flows as the one calculated using both short-term and long-term returns. The expected rate of return was then set
equivalent to the single equivalent rate calculated above and rounded down to the nearest one quarter of one
percent.
The table below reflects the long-term expected real rate of return by asset class. The rate of return was calculated
using the capital market assumptions applied to determine the discount rate and asset allocation. These rates of
return are net of administrative expenses.
Asset Class
New Strategic
Allocation
Global Equity
Global Fixed Income
Inflation Sensitive
Private Equity
Real Estate
Infrastructure and Forestland
Liquidity
47.00%
19.00%
6.00%
12.00%
11.00%
3.00%
2.00%
Total
100.00%
(a) An expected inflation of 2.5% used for this period.

(b) An expected inflation of 3.0% used for this period.
50
Real Return Year 1

- 10(a)
Real Return Years

11+(b)
5.25%
0.99%
0.45%
6.83%
4.50%
4.50%
-0.55%
5.71%
2.43%
3.36%
6.95%
5.13%
5.09%
-1.05%
June 30, 2015

C. Changes in the Net Pension Liability
As of June 30, 2015, the City reported net pension liabilities for its proportionate share of the net pension liability
of the Miscellaneous and Public Safety Plans as follows:
Proportionate Share of Net Pension Liability

Miscellaneous Plan
Public Safety Plan
6,119,423
5,544,723
Sensitivity of the Net Pension Liability to Changes in the Discount Rate - The following presents the net pension
liability of the City for each Plan, calculated using the discount rate, as well as what the City's net pension liability
would be if it were calculated using a discount rate that is 1 percentage point lower or 1 percentage point higher
than the current rate:
Miscellaneous
1% Decrease
Public Safety
6.50%
6.50%
10,902,919
9,541,749
Current Discount Rate

7.50%
6,119,423
7.50%
5,544,723
1% Increase
8.50%
2,149,575
8.50%
2,251,345
Pension Plan Fiduciary Net Position - Detailed information about each pension plan's fiduciary net position is
available in the separately issued CalPERS financial reports.
51
June 30, 2015

D. Pension Expenses and Deferred Outflows/Inflows of Resources Related to Pensions
For the fiscal year ended June 30, 2015, the City recognized pension expense of $914,434 ($446,031 for the
Miscellaneous Plan and $468,403 for the Safety Plan). At June 30, 2015, the Local Government reported deferred
outflows of resources and deferred inflows of resources related to pensions from the following sources:
Miscellaneous Plans:
Deferred Outflows
Deferred Inflows
of Resources
of Resources
Pension contributions subsequent to measurement date
$
323,796
$
Net differences between projected and actual earnings on plan investments
(2,056,409)
193,053
(15,007)
Total
$
516,849
$
(2,071,416)
Public Safety Plans:
Pension contributions subsequent to measurement date

Net differences between projected and actual earnings on plan investments
Total
Deferred Outflows
of Resources
$
401,409
122,454
523,863
Deferred Inflows
of Resources
$
(1,674,136)
(26,293)
$
(1,700,429)
$725,205 reported as deferred outflows of resources related to contributions subsequent to the measurement date
will be recognized as a reduction of the net pension liability in the fiscal year ended June 30, 2016. Other amounts
reported as deferred inflows (outflows) of resources related to pensions will be recognized as pension expense as
follows:
Fiscal Year Ended
June 30,
2016
834,706
2017
834,706
2018
854,289
2019
932,637
52
June 30, 2015
Note 8 OTHER POST EMPLOYMENT BENEFITS

Plan Description
The City of Carmel-by-the-Sea Retiree Healthcare Plan (Plan) is a single-employer defined benefit healthcare
plan administered by the City. The Plan provides access to lifetime healthcare benefits to eligible retirees and
their dependents. The City provides retiree medical benefits through the California Public Employees Retirement
System healthcare program (PEMHCA). For eligible retirees, the City contributes not less than 5% of the
active contribution times years in PEMHCA (max $100/month increase). The City pays actives the PEMHCA
minimum, and the City joined PEMHCA in 1998. The Citys retiree contribution was $115 for 2013, $119 for
2014 and $122 for 2015.
Eligibility: Employees are eligible to participate in the Citys Retiree Healthcare Plan if they retire directly
from the City under CalPERS with five years of PERS service (there is no minimum service requirement if
retirement is due to a service-connected disability.) Since PEMHCA is a community rated plan for most
employers, an implied subsidy is not reflected under GASB 45. The City does not provide dental, vision, life, or
Medicare Part B reimbursement to retirees. The Retiree Healthcare Plan does not issue a financial report.
Membership of the plan consisted of the following at June 30, 2015:
Retirees and beneficiaries receiving benefits

Other participants fully eligible for benefits
Other participants not fully eligible for benefits
34
25
55
Total
114
Funding Policy
The contribution requirements of the Plan participants and the City are established by and may be amended by the
City. The City currently does not prefund plan benefits.
The Annual Required Contribution (ARC) is an amount actuarially determined in accordance with the parameters
of GASB Statement No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefit
Other Than Pensions. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period
not to exceed 30 years.
For fiscal year 2015, the City contributed $47,721 for current benefit payments.
Annual OPEB Cost and Net OPEB Obligation
The Citys annual other postemployment benefit cost (expense) is calculated based on the annual required
contribution (ARC) of the employer. The ARC represents a level of funding that, if paid on an ongoing basis, is
projected to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding
excess) over a period not to exceed 30 years.
53
June 30, 2015
Note 8 OTHER POST EMPLOYMENT BENEFITS (CONTINUED)

Annual OPEB Cost and Net OPEB Obligation.
The following table shows the components of the Citys annual OPEB cost for the fiscal year, the amount actually
contributed to the Plan, and changes in the Citys Net OPEB obligation:
Annual required contribution (ARC)
Interest on net OPEB obligation
Adjustment to ARC
Annual OPEB cost (expense)
Contributions made by City
Increase in net OPEB obligation
Net OPEB obligations, beginning of fiscal year
Net OPEB obligations, end of fiscal year
295,155
46,666
(59,112)
282,709
(47,721)
234,988
1,333,306
$ 1,568,294
The Citys annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net
OPEB obligation for fiscal year 2015 and the two preceding fiscal years were as follows:
Fiscal
Year
Ended
6/30/2013
6/30/2014
6/30/2015
Annual
OPEB
Cost
$
Percentage of
Annual OPEB
Cost Contributed
304,008
266,541
282,709
Net OPEB
Obligation
(Asset)
18%
18%
17%
1,115,277
1,333,306
1,568,294
Funded Status and Funding Progress. The funded status of the Plan as of July 1, 2014, the Plans most
recent actuarial valuation date, was as follows:
Actuarial accrued liability (AAL)
Actuarial value of plan assets
Unfunded actuarial accrued liability (UAAL)
Funded ratio (actuarial value of plan assets/AAL)
Covered payroll (active plan participants)
UAAL as a percentage of covered payroll
$
$
$
2,760,357
2,760,357
0%
5,118,420
53.93%
Actuarial valuations of an ongoing plan involve estimates of the value of expected benefit payments and
assumptions about the probability of occurrence of events far into the future. Examples include
assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined
regarding the funded status of the plan and the annual required contributions of the employer are
subject to continual revision as actual results are compared with past expectations and new estimates are
made about the future. The schedule of funding progress, presented as required supplementary
information following the notes to the financial statements, presents multi-year trend information about
whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liabilities for benefits.
54
June 30, 2015
Note 8 OTHER POST EMPLOYMENT BENEFITS (CONTINUED)
Actuarial Methods and Assumptions.

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as
understood by the employer and the plan participants) and include the types of benefits provided at the
time of each valuation and the historical pattern of sharing of benefit costs between the employer and
plan participants to that point. The actuarial methods and assumptions used include techniques that are
designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial
value of assets, consistent with the long-term perspective of the calculations.
For the July 1, 2014, actuarial valuation, the entry age normal actuarial cost method was used. The
actuarial assumptions included a 3.5% discount rate. Premiums were assumed to increase at a rate of
4.0% per year. The total UAAL calculated in the July 1, 2014, valuation was amortized as a level
percentage of projected payroll over a fixed 25-year period beginning fiscal year 2014.
Note 9 NET POSITION/FUND BALANCES
At June 30, 2015, the City had recorded restricted net position in the governmental activities as follows:
Governmental
Activities
Restricted for:
Community development
Streets and roads
Measure D
Debt service
Total Restricted
55
372,659
265,806
2,865,053
358,955
3,862,473
June 30, 2015
Note 9 NET POSITION/FUND BALANCES (CONTINUED)

The constraints placed on fund balance for the major governmental funds and all other governmental funds at June
30, 2015 are as follows:
Fund Balances
Community Development
Streets and Roads
Measure D
Debt Service
Total Restricted
Committed for:
Economic Stabilization
Total Committed
Assigned for:
Post-employment benefits
Capital Projects
Parking
Traffic Safety
Streets and Roads
Forest Theater
Total Assigned
Unassigned
Total Fund Balances (Deficits)
General
Fund
$
-
Harrison
Parking Ambulance
Memorial
Special
Special
Nonmajor
Library Special Revenue Revenue Governmental
Revenue Fund
Fund
Fund
Funds
Total
$
$
$
$
372,659 $ 372,659
265,806
265,806
2,865,053
2,865,053
400,015
400,015
3,903,533
3,903,533
4,561,070
4,561,070
4,561,070
4,561,070
414,283
1,333,306
414,283
1,333,306
1,085,224
698,086
42,619
29,527
18,012
3,621,057
856,750
$ 12,942,410
1,085,224
698,086
1,747,589
1,541,150
$ 7,849,809
1,085,224
698,086
1,085,224
$ 698,086
42,619
29,527
18,012
90,158
(684,400)
$ (684,400) $
3,993,691
Note 10 RISK MANAGEMENT

The City of Carmel-by-the-Sea (City) is a member of CSAC-EIA (California State and County Excess Insurance
Authority) which is a shared risk pool. CSAC-EIA covers claims for City for both Workers Compensation and
General Liability. The Citys Liability SIR is pre-funded through CSAC-EIA for 8 quarters of payments made on
behalf of City. Currently, the SIR fund for the City with CSAC-EIA is maintained at $8,183. If the pre-funded
SIR balance drops below this amount, the City is billed by CSAC-EIA to replenish the fund to the $8,183 level.
The City does not make claim payments, they are all issued by the city's third party administrator from a CSA-EIA
account.
The City has two layers of Liability coverage through CSAC-EIA and under the first layer, the Primary General
Liability layer, there is an SIR (Self Insured Retention) of $10,000 per claim. Thereafter, the next layer of
coverage kicks in (General Liability 1 program) which carries an SIR of $100,000 which is satisfied by exhausting
the coverage limit of $100,000 under the Primary Liability program. The maximum limit of coverage under the
primary General Liability 1 program is $25 million. The City retains the risk of loss above $25 million.
56
June 30, 2015
Note 10 RISK MANAGEMENT (CONTINUED)

For Workers Compensation, the City is a member of both the CSAC-EIA Primary Workers Compensation
program and then, the CSAC-EIA Excess Workers Compensation program.
The Primary Workers
compensation program provides dollar 1 coverage to the City for Workers Compensation claims. In other
words, City has no deductible or SIR. This layer of Workers Compensation coverage carries a maximum
limit of $125,000 per occurrence. Thereafter, CSAC-EIA's excess coverage steps in and the SIR (Self
Insured Retention) is $125,000 which again, is satisfied by exhausting the limits of coverage under the Primary
Workers Compensation program. The upper limit of coverage under the Excess Workers Compensation program
is "statutory". What this means is that regardless of the total cost of the claim, it is covered under the
CSAC-EIA Excess Workers Compensation program. There is absolutely no monetary exposure to the City under
these two Workers Compensation programs except for the premium costs to purchase this coverage. The City has
had no settlements which exceeded insurance coverage in the last three fiscal years and no significant changes or
reductions in insurance coverage during the current year.
Note 11 PRIOR PERIOD ADJUSTMENTS
A prior period adjustment in the amount of ($14,002,854) was made on the statement of activities due to an
overstatement of cash and investments ($22,943), an overstatement of accrued liabilities of $233,335, an
overstatement of accounts receivable ($11,986), an understatement of capital assets of $4,790, and an
understatement of net pension liability ($15,703,462), and an understatement of deferred outflows of resources of
$1,497,412. The adjustment for net pension liability and deferred outflows of resources is due to implementation
of GASB Statement No. 68.
A prior period adjustment in the amount of $680,436 was made in the General Fund due to an overstatement of
cash and investments ($12,899), an overstatement of accrued liabilities of $233,335, and an overstatement of
claims payable $460,000 in the prior fiscal year.
A prior period adjustment in the amount of ($10,044) was made in the Ambulance Special Revenue Fund due to an
overstatement of cash and investments in the prior fiscal year.
A prior period adjustment in the amount of ($11,986) was made in the Gas Tax Special Revenue Fund due to an
overstatement of accounts receivable in the prior fiscal year.
Note 12 SUBSEQUENT EVENTS
On April 4, 2016, the City Council authorized an agreement with Accela Inc. for implementation of a financial
software system and a hosting agreement for a five year term, in an amount not to exceed $199,500.
On April 4, 2016, the City Council authorized a construction contract with Monterey Peninsula Engineering for
the 2016 Street Projects in an amount not to exceed $1,121,938.
57
REQUIRED SUPPLEMENTARY INFORMATION
58
June 30, 2015
Using the most recent actuarial valuation dated July 1, 2014, the following is the funded status of the OPEB plan
as of the actuarial date:
Entry Age
Normal
Accrued
Liability
(A)
Date
6/30/2009
7/1/2014
2,752,948
2,760,357
Unfunded
Liability/
(Excess
Assets)
((A)-(B))
Actuarial
Value of
Assets
(B)
$
2,752,948
2,760,357
59
Funded
Ratio
((B)/(A))
0%
0%
Covered
Payroll
(C)
$
5,432,667
5,118,420
Actuarial
Accrued Liability
% of Covered
Payroll
((A-B)/C)
50.67%
53.93%
June 30, 2015
Cost-Sharing Multiple-Employer Defined Benefit Pension Plan

Last 10 Fiscal Years*
Note 1: Schedules of the Citys Proportionate Share of the Net Pension Liability
Proportion of the net pension liability
Miscellaneous
Fiscal Year 2014-15
0.09823%
Proportionate share of the net pension liability
6,112,274
Covered employee payroll
2,752,690
Proportionate Share of the net pension liability

as a percentage of covered employee payroll
222.05%
Plan's fiduciary net position
29,903,178
Plan's total pension liability
36,015,452
Plan fiduciary net position as a percentage of

total pension liability
83.03%
Notes to Schedule
Change in Benefit Terms: The figures above do not include any liability impact that may have resulted from plan
changes which occurred after June 30, 2013 as they have minimal cost impact. This applies for voluntary benefit
changes as well as any offers of Two Years Additional Service Credit (a.k.a. Golden Handshakes).
Change in Assumptions: None
*Fiscal year 2015 was the 1st year of implementation, therefore only one year is shown.
60
June 30, 2015

Note 1: Schedules of the Citys Proportionate Share of the Net Pension Liability (Continued)
Miscellaneous
Tier II
Fiscal Year 2014-15
0.00011%
7,149
425,252

1.68%
34,975
42,124

83.03%
Notes to Schedule
61
June 30, 2015

Safety
Fiscal Year 2014-15
0.08894%
5,534,383
1,450,728

381.49%
24,250,216
29,784,599

81.42%
Notes to Schedule
62
June 30, 2015

Safety
Tier II
Fiscal Year 2014-15
0.00016%
10,340
266,296

3.88%
45,305
55,645

81.42%
Notes to Schedule
63
June 30, 2015

Note 3: Schedules of Pension Contributions
Misce llane ous
Fiscal Year 2014-15
Actuarially Determined Contribution2
268,080
Contributions in Relation to the Actuarially Determined Contribution

Contribution Deficiency (Excess)
(268,080)
-
Covered Employee Payroll3
2,326,679
Contributions as a Percentage of Covered Employee Payroll3

1
11.52%
Historical information is required only for measurement periods for which GASB 68 is applicable.
Employers are assumed to make contributions equal to the actuarially determined contributions.
However, some employers may choose to make additional contributions towards their unfunded
liability. Employer contributions for such plans exceed the actuarially determined contributions.
Covered Employee Payroll represented above is based on pensionable earnings provided by the
employer. However, GASB 68 defines covered employee payroll as the total payroll of employees
pension plan. Accordingly, if pensionable earnings are different than total earnings for covered
employees, the employer should display in the disclosure footnotes the payroll based on total
earnings for the covered group and recalculate the required payroll-related ratios.
Note s to Sche dule :

The actuarial methods and assumptions used to set the actuarially determined contributions for
Fiscal Year 2014-15 were from the June 30, 2012 public agency valuations.
Actuarial Cost Method
Amortization Method
Remaining amortization period
Assets Valuation Method
Inflation
Salary Increases
Payroll Growth
Retirement Age
Mortality
Entry Age Normal

Level Percent of Payroll
19 years
15 year smoothed market
2.75%
3.30% to 14.20% depending on age, service and type of employment
3.00%
7.50% net of administrative expenses
50-56 years
The mortality assumptions are based on mortality rates resulting
from the CalPERS Experience Study adopted by the CalPERS
Board, first used in the June 30, 2009 valuation. For purposes of the
post-retirement mortality rates, those revised rates include 5 years
of projected on-going mortality improvement using Scale AA
published by the Society of Actuaries until June 30, 2010.
* Fiscal year 2015 was the 1st year of implementation, therefore only one year is shown.
64
June 30, 2015

Note 3: Schedules of Pension Contributions (Continued)
Miscellaneous
Tier II
Fiscal Year 2014-15
55,716

(55,716)
-
696,015
8.01%
Notes to Schedule:
Amortization Method
Inflation
Salary Increases
Payroll Growth
Retirement Age
Mortality
Entry Age Normal Cost Method

19 years
2.75%
3.00%
50-56 years
65
June 30, 2015

Note 3: Schedules of Pension Contributions (Continued)
Safety
Fiscal Year 2014-15
360,496

(360,496)
-
1,294,467
27.85%
Notes to Schedule:
Amortization Method
Inflation
Salary Increases
Payroll Growth
Retirement Age
Mortality

13 years
2.75%
3.00%
50-55 years
66
June 30, 2015

Note 3: Schedule of Pension Contributions (Continued)
Safe ty
Tie r II
Fiscal Year 2014-15
40,913
Contributions in Relation to the Actuarially Determined Contribution2

(40,913)
-
203,720
20.08%
Note s to Sche dule :

Amortization Method
Inflation
Salary Increases
Payroll Growth
Retirement Age
Mortality

13 years
2.75%
3.00%
50-55 years
67
Budgetary Comparison Schedule
General Fund
Budgeted Amounts
Variance with
Final Budget
Positive
(Negative)
Original
Final
Actual
$ 16,880,953
495,125
15,000
232,103
26,250
470,270
485,286
$ 16,880,953
495,125
15,000
232,103
26,250
470,270
485,286
$ 14,702,528
504,419
161,620
9,246
256,097
249,537
$ (2,178,425)
9,294
(15,000)
(70,483)
(17,004)
(214,173)
(235,749)
Total Revenues
18,604,987
18,604,987
15,883,447
(2,721,540)
Expenditures:
Current:
General government
Public safety
Public works
Capital outlay
3,124,839
950,650
5,353,028
2,006,772
720,305
884,593
319,260
4,524,330
3,124,839
950,650
5,353,028
2,006,772
720,305
884,593
319,260
4,524,330
3,586,911
1,637,602
5,255,170
1,260,593
544,902
766,242
315,780
2,396,667
(462,072)
(686,952)
97,858
746,179
175,403
118,351
3,480
2,127,663
17,883,777
17,883,777
15,763,867
2,119,910
721,210
721,210
119,580
Revenues:
Taxes and assessments
Intergovernmental
Current service charges
Other revenue
Total Expenditures
Excess of Revenues Over (Under)
Expenditures
Transfers in
Transfers out
Total Other Financing Sources (Uses)
Net Change in Fund Balance
Fund Balance, July 1, 2014
1,085,000
(2,629,607)
1,085,000
(2,629,607)
2,073,032
(2,156,660)
988,032
472,947
(1,544,607)
(1,544,607)
(83,628)
1,460,979
(823,397)
(823,397)
7,133,421
35,952
7,133,421
Fund Balance, June 30, 2015
7,133,421
$
6,310,024
7,133,421
$
6,310,024
68
859,349
7,133,421

Fund Balance, July 1, 2014, Restated
(601,630)
680,436
680,436
7,813,857
680,436
7,849,809
1,539,785
Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
Budgeted Amounts
Original
Revenues
Charges for current services
Contributions
Total Revenues
1,000
18,100
300,200
Final
$
1,000
18,100
300,200
Actual
$
1,988
17,603
686,025
Variance with
Final Budget
Positive
(Negative)
$
988
(497)
385,825
319,300
319,300
705,616
386,316
Expenditures
Current:
1,292,376
1,292,376
1,231,357
61,019
Total Expenditures
1,292,376
1,292,376
1,231,357
61,019
Excess (Deficit) of Revenues over

Expenditures
Transfers in
(973,076)
(973,076)
(525,741)
447,335
973,076
973,076
948,596
(24,480)
973,076
973,076
948,596
(24,480)
422,855
422,855

662,369
$
662,369
69
662,369
$
662,369
662,369
$
1,085,224
422,855
Ambulance Fund
Budgeted Amounts
Original
Revenues
Charges for current services
Total Revenues
Expenditures
Current:
Public Safety
Total Expenditures
Expenditures
Transfers in
Transfers out
727,500
Final
$
727,500
Actual
$
630,516
1,153,261
1,153,261
1,139,090
14,171
1,153,261
1,153,261
1,139,090
14,171
(425,761)
(508,574)
(82,813)
425,761
425,761
493,384
(180,000)
67,623
(180,000)
425,761
425,761
313,384
(112,377)
(195,190)
(195,190)
(479,166)
(479,166)
$
(96,984)
(425,761)
(479,166)
Fund Balance (Deficit), June 30, 2015
40
(97,024)
727,500
(479,166)
Fund Balance (Deficit), July 1, 2014, Restated
727,500

Fund Balance (Deficit), July 1, 2014
40
630,476
Variance with
Final Budget
Positive
(Negative)
(479,166)
70
(479,166)
$
(479,166)
(10,044)
(10,044)
(489,210)
(10,044)
(684,400)
(205,234)
CITY OF CARMEL BY-THE-SEA

NONMAJOR GOVERNMENTAL FUNDS
Special Revenue Funds

Special revenue funds are used to account for specific revenues that are restricted by law
or administrative action and expenditures for specified purposes. Nonmajor special
revenue funds used by the City are listed below:
Traffic Safety Fund This fund is used to account for court fines collected on the Citys account
for moving violations, as well as traffic safety and public safety augmentation funds for police
and fire.
Road Impact Fees Fund This fund is used to account for road impact fees used for
transportation related expenditures.
Grants Fund This fund is used to account for grants utilized for specific purposes.
Forest Theater Fund This fund is used to account for activities related to the Forest Theater.
Gas Tax Fund This fund is used to account for revenues collected in accordance with the Streets
and Highway Code.
Measure D Fund This fund is used to account for the transaction and use tax increase to be used
to maintain essential services, including fire, ambulance and police response times; fund capital
needs, including streets, beach, parks, forest and trails; increase code compliance; maintain
libraries, Sunset Center and other public facilities; address CalPERS pension liabilities and other
debt; and provide other general City services.
Debt Service Fund

Debt Service Funds are used to account for accumulation of resources for, and payment
of, principal and interest on the Citys governmental activities long-term debt. The
nonmajor debt service fund of the City is listed below:
Debt Service Fund This fund is used to account for activities related to the repayment of the
Certificate of Participation, Pension Obligation Bond, and capital lease obligations.
71
Combining Balance Sheet
Nonmajor Governmental Funds
June 30, 2015
Traffic
Safety
Assets
Receivables:
Accounts
Intergovernmental
Total Assets
Liabilities and Fund Balances
Liabilities:
Accounts payable
Accrued liabilities
Road
Impact Fees
34,609
29,527
Grants
364,326
8,010
8,333
$
42,619
29,527
372,659
Total Liabilities
Fund Balances:
Restricted
Assigned
372,659
Total Fund Balances

Total Liabilities and Fund Balances
42,619
29,527
42,619
29,527
42,619
72
29,527
372,659
$
372,659
Gas
Tax
Forest
Theater
18,012
Measure D
266,409
2,359,987
Total
Nonmajor
Funds
General
Debt Service
400,015
8,010
513,399
505,066
$
18,012
266,409
603
2,865,053
400,015
3,994,294
603
18,012
603
603
265,806
2,865,053
400,015
3,903,533
90,158
265,806
2,865,053
400,015
3,993,691
18,012
18,012
3,072,870
400,015
266,409
2,865,053
73
400,015
3,994,294
Combining Statement of Revenues, Expenditures, and
Changes in Fund Balances
Nonmajor Governmental Funds
Traffic
Safety
Revenues:
Taxes
Intergovernmental
Current service charges
Road
Impact Fees
$
215,838
Grants
$
10,837
747,434
109,906
Total Revenues
120,743
215,838
747,434
116,127
215,838
747,434
(100,000)
(215,000)
(301,702)
(100,000)
(215,000)
(301,702)
Expenditures:
General government
Public safety
Public works
Debt service:
Principal
4,616
Total Expenditures
4,616

Expenditures
Transfers in
Transfers out
Net Change in Fund Balances
16,127
838
445,732
Fund Balances (Deficits), July 1, 2014
26,492
28,689
(73,073)
26,492
28,689
(73,073)

Fund Balances (Deficits), July 1, 2014, Restated
Fund Balances, June 30, 2015
42,619
74
29,527
372,659
Forest
Theater
$
Gas
Tax
$
Measure D
$
2,718,256
Total
Nonmajor
Funds
General
Debt Service
$
115,881
1,350
1,350
115,881
2,718,256
1,201,246
6,183
6,183
4,616
2,129
23,437
1,046,128
360,610
1,046,128
360,610
1,412,921
1,443,103
2,129
23,437
2,129
(779)
23,437
92,444
2,718,256
(90,000)
(93,871)
(1,790,702)
(90,000)
(93,871)
(1,790,702)
(90,779)
(1,427)
108,791
279,219
(1,412,921)
(241,857)
1,412,923
1,412,923
(2,591,275)
1,412,923
(1,178,352)
927,554
1,298,047
1,937,499
400,013
2,707,630
(11,986)
108,791
267,233
18,012
$ 265,806
2,718,256
215,838
874,152
1,350
109,906
(11,986)
1,937,499
$
2,865,053
400,013
$
400,015
75
2,695,644
$
3,993,691
Traffic Safety Special Revenue Fund
Budget
Final
Revenues:
Intergovernmental
Total Revenues
150,000
Actual
$
150,000
4,616
(4,616)
4,616
(4,616)
150,000
116,127
(33,873)
(150,000)
(100,000)
50,000
(150,000)
(100,000)
50,000
16,127
16,127

26,492
$
10,837
(40,094)
(29,257)
Total Expenditures

Transfers out
120,743
Expenditures:
Current:
Public safety

Expenditures
10,837
109,906
Variance with
Final Budget
Positive
(Negative)
26,492
76
26,492
$
42,619
16,127
Road Impact Fees Special Revenue Fund
Budget
Final
Revenues:
Fees and permits
Total Revenues
Expenditures
Transfers out
200,000
Actual
$
215,838
15,838
200,000
215,838
15,838
(200,000)
(215,000)
(15,000)
(200,000)
(215,000)
(15,000)
838
28,689
$
15,838
200,000
215,838
Variance with
Final Budget
Positive
(Negative)
28,689
77
838
28,689
$
29,527
838
Grants Special Revenue Fund
Budget
Final
Revenues:
Intergovernmental
402,500
Actual
$
747,434
Variance with
Final Budget
Positive
(Negative)
$
344,934
Total Revenues
402,500
747,434
344,934

Transfers out
(402,500)
(301,702)
100,798
(402,500)
(301,702)
100,798
445,732
445,732

(73,073)
$
(73,073)
78
(73,073)
$
372,659
445,732
Forest Theater
Budget
Final
Revenues:
Current services charges
Total Revenues
90,000
Actual
$
90,000
1,350
Variance with
Final Budget
Positive
(Negative)
$
(88,650)
1,350
(88,650)
Expenditures:
Current:
2,129
(2,129)
Total Expenditures
2,129
(2,129)

Expenditures
90,000

Transfers out
(779)
(90,000)
(90,000)
(90,000)
(90,000)
(90,779)

(90,779)
108,791
$
108,791
79
(90,779)
108,791
$
18,012
(90,779)
Gas Tax Special Revenue Fund
Budget
Final
Revenues:
Intergovernmental
Total Revenues
117,500
Actual
$
117,500
23,437
(23,437)
23,437
(23,437)
117,500
92,444
(25,056)
(117,500)
(93,871)
23,629
(117,500)
(93,871)
23,629
(1,427)
(1,427)

279,219
279,219

Fund Balance, July 1, 2014, Restated
279,219
$
(1,619)
(1,619)
Total Expenditures

Transfers out
115,881
Expenditures:
Current:
Public works

Expenditures
115,881
Variance with
Final Budget
Positive
(Negative)
279,219
80
(11,986)
(11,986)
267,233
(11,986)
265,806
(13,413)
Measure D Special Revenue Fund
Budget
Final
Revenues:
Taxes
1,399,000
Actual
Variance with
Final Budget
Positive
(Negative)
2,718,256
1,319,256
Total Revenues
1,399,000
2,718,256

Transfers out
(1,399,000)
(1,790,702)
(391,702)
(1,399,000)
(1,790,702)
(391,702)

927,554

1,319,256
1,937,499
$
1,937,499
81
927,554
1,937,499
$
2,865,053
927,554
MANAGEMENT REPORT
AND
AUDITORS COMMUNICATION LETTER
June 30, 2015
June 30, 2015
TABLE OF CONTENTS
Required Communication under SAS No. 114 ............................................................................ 1

Independent Auditors Report on Internal Control over Financial
Reporting and on Compliance and Other Matters Based on an
Audit of Financial Statements Performed in Accordance with
Government Auditing Standards.............................................................................................. 4
Current Year Recommendations:
Material Weakness:
2015-01 Deficiencies in recording of pooled cash.............................................................. 6
Significant Deficiencies:
2015-02 Cash receipts function has overlapping duties...................................................... 6
2015-03 Payroll function has overlapping duties ............................................................... 7
2015-04 Cash disbursements function has overlapping duties ........................................... 7
2015-05 No review or sign-off on fuel usage reports ......................................................... 8
2015-06 No supporting receipts for numerous City credit card purchases ......................... 8
2015-07 Excessive use of override function at refueling station and lack of
vehicle number on vehicle log ............................................................................. 8
2015-08 No approved position schedule for the 2014-15 fiscal year for non-safety
employees ............................................................................................................ 9
2015-09 Firefighters are using the same employee ID to fill up the fire vehicles .............. 9
2015-10 Deficiencies in police cash receipts .................................................................... 10
2015-11 Payroll deficiencies............................................................................................. 10
2015-12 Lack of procurement documentation .................................................................. 11
2015-13 Master fee schedule has not been approved annually ......................................... 11
2015-14 Deficiencies in cash disbursements .................................................................... 12
2015-15 Deficiencies in cash receipts............................................................................... 12
Other Matters:
2015-16 Lack of video cameras at the Corporation Yard ................................................. 13
2015-17 The Public Works building has numerous inventory supplies that
are not being used and are not properly safeguarded ......................................... 14
2015-18 Petty cash was not safeguarded .......................................................................... 14
2015-19 The COPS grant revenue was being recorded to fund balance instead
of a revenue account ......................................................................................... 14
2015-20 No contract with Forest Theatre Guild for storage fees...................................... 15
2015-21 Lack of approval signatures on credit card statements ....................................... 15
2015-22 Lack of audit committee ..................................................................................... 15
Other Matters: (Continued)

2015-23 Inconsistent use of time clocks ........................................................................... 16
2015-24 Deposit payable accounts and fee collection accounts have debit balances ....... 16
2015-25 One check issued out of sequence and one outstanding check over
one year old ........................................................................................................ 17
2015-26 Petty cash is listed at incorrect amount............................................................... 17
Status of Prior Year Recommendations..................................................................................... 18
PARTNERS
RONALD A LEVY, CPA
HADLEY Y HUI, CPA
ADAM V GUISE, CPA
TRAVIS J HOLE, CPA

433 NORTH CAMDEN DRIVE, SUITE 730
TEL: 310.273.2745
FAX: 310.670.1689
www.mlhcpas.com

5800 HANNUM AVENUE, SUITE E
TEL: 310.670.2745
FAX: 310.670.1689
www.mlhcpas.com
October 24, 2016

To the Honorable Board of Directors
Carmel-by-the-Sea, California
We have audited the financial statements of the governmental activities, each major fund, and the
aggregate remaining fund information of the City of Carmel-by-the-Sea (City) for the fiscal year ended
June 30, 2015. Professional standards require that we provide you with the information about our
responsibilities under auditing standards generally accepted in the United States of America and
Government Auditing Standards, as well as certain information related to the planned scope and timing of
our audit. We have communicated such information in our letter to you dated September 22, 2015.
Professional standards also require that we communicate to you the following information related to our
audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the City are described in Note 1 to the basic financial statements. As
discussed in Note 1G of the notes to the basic financial statements, two new accounting policies were
adopted during the fiscal year. The new policies are Governmental Accounting Standards Board (GASB)
Statements No. 68 and 71. We noted no transactions entered into by the City during the fiscal year for
which there is a lack of authoritative guidance or consensus. All significant transactions have been
recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on managements knowledge and experience about past and current events and assumptions about
future events. Certain accounting estimates are particularly sensitive because of their significance to the
financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the financial statements were:
Managements estimates included the funding progress and net pension liability of CalPERS, the
estimated historical cost and useful lives of capital assets (specifically infrastructure), and the
assumptions used for estimating the other postemployment benefits liability. These estimates are
based on CalPERSs actuarial estimates, historical data and industry guidelines for capital assets,
and consultants assumptions developed by consultants for postemployment benefits payable.
We evaluated the key factors and assumptions used to develop the estimates above in determining
that they are reasonable in relation to the financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
1
Difficulties Encountered in Performing the Audit

We encountered no significant difficulties in dealing with management in performing and completing our
audit other than reconciling the pooled cash accounts.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
Management has corrected all such misstatements. In addition, two of the misstatements detected as a
result of audit procedures and corrected by management were material, either individually or in the
aggregate to the financial statements taken as a whole. These adjustments were for sales tax receivable
and pooled cash.
Disagreements with Management
For purposes of this letter, a disagreement with management is a financial accounting reporting, or
auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial
statements or the auditors report. We are pleased to report that no such disagreements arose during the
course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated October 24, 2016.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and accounting
matters, similar to obtaining a second opinion on certain situations. If a consultation involves
application of an accounting principle to the Citys financial statements or a determination of the type of
auditors opinion that may be expressed on those statements, our professional standards require the
consulting accountant to check with us to determine that the consultant has all the relevant facts. To our
knowledge, there were no such consultations with other accountants.
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the Citys auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not a
condition to our retention.
Other Matters
We applied certain limited procedures to the managements discussion and analysis, the Schedule of
Funding Progress of Other Postemployment Benefits, the Schedule of the Citys Proportionate Share of
the Net Pension Liability, the Schedule of Contributions, and the Budgetary Comparison Schedules of the
General Fund and major special revenue funds, which are required supplementary information (RSI) that
supplements the basic financial statements. Our procedures consisted of inquiries of management
regarding the methods of preparing the information and comparing the information for consistency with
managements responses to our inquiries, the basic financial statements, and other knowledge we
obtained during our audit of the basic financial statements. We did not audit the RSI and do not express
an opinion or provide any assurance on the RSI.
2
We were engaged to report on the combining nonmajor fund financial statements and nonmajor special
revenue funds budgetary comparison schedules, which accompany the financial statements but are not
RSI. With respect to this supplementary information, we made certain inquiries of management and
evaluated the form, content, and methods of preparing the information to determine that the information
complies with accounting principles generally accepted in the United States of America, the method of
preparing it has not changed from the prior period, and the information is appropriate and complete in
relation to our audit of the financial statements. We compared and reconciled the supplementary
information to the underlying accounting records used to prepare the financial statements or to the
financial statements themselves.
Restriction on Use
This information is intended solely for the information and use of the City Council and management of
the City and is not intended to be, and should not be, used by anyone other than these specified parties.
Very truly yours,
MOSS, LEVY & HARTZHEIM, LLP

Culver City, CA
PARTNERS
RONALD A LEVY, CPA
HADLEY Y HUI, CPA
ADAM V GUISE, CPA
TRAVIS J HOLE, CPA

433 NORTH CAMDEN DRIVE, SUITE 730
TEL: 310.273.2745
FAX: 310.670.1689
www.mlhcpas.com

5800 HANNUM AVENUE, SUITE E
TEL: 310.670.2745
FAX: 310.670.1689
www.mlhcpas.com
INDEPENDENT AUDITORS REPORT ON INTERNAL CONTROL OVER FINANCIAL

REPORTING AND ON COMPLIANCE AND OTHER MATTERS
BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS
To the Honorable Board of Directors
Carmel-by-the-Sea, California
We have audited, in accordance with the auditing standards generally accepted in the United States of
America and the standards applicable to financial audits contained in Government Auditing Standards
issued by the Comptroller General of the United States, the financial statements of the governmental
activities, each major fund, and the aggregate remaining fund information of the City of Carmel-by-theSea (City) as of and for the fiscal year ended June 30, 2015, and the related notes to the financial
statements, which collectively comprise the Citys basic financial statements, and have issued our report
thereon dated October 24, 2016.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Citys internal control
over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinion on the financial statements, but not for the
purpose of expressing an opinion on the effectiveness of Citys internal control. Accordingly, we do not
express an opinion on the effectiveness of the Citys internal control.
Our consideration of internal control was for the limited purpose described in the first paragraph of this
section and was not designed to identify all deficiencies in internal control that might be material
weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may
exist that were not identified. However, as described in the current year recommendations section, we
identified certain deficiencies in internal control that we consider to be material weaknesses and
significant deficiencies.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to prevent, or
detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination
of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement
of the entitys financial statements will not be prevented, or detected and corrected on a timely basis. We
consider the deficiency described in the current year recommendations section to be a material weakness
(Finding #2015-01).
4
A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less

severe than a material weakness, yet important enough to merit attention by those charged with
governance. We consider the deficiencies described in the current year recommendations section to be
significant deficiencies (Finding #2015-02 to #2015-15).
Compliance and Other Matters
As part of obtaining reasonable assurance about whether Citys financial statements are free from material
misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts,
and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The
results of our tests disclosed no instances of noncompliance that are required to be reported under
Government Auditing Standards.
We noted certain other matters that are reported in the current year recommendations section as #2015-16
through #2015-26.
Citys Responses to Findings
The Citys responses to the findings identified in our audit are described in the current year
recommendations section. The Citys responses were not subjected to the auditing procedures applied in
the audit of the financial statements and, accordingly, we express no opinion on them.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance
and the results of that testing, and not to provide an opinion on the effectiveness of the entitys internal
control or on compliance. This report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the entitys internal control and compliance. Accordingly,
this communication is not suitable for any other purpose.
Very truly yours,
Moss, Levy & Hartzheim, LLP

Culver City, California
October 24, 2016
CURRENT YEAR RECOMMENDATIONS

Material Weakness
2015-01
Finding Deficiencies in recording of pooled cash:

During our audit of cash, we noted the pooled cash accounts were not reconciled.
Effect:
Without proper reconciliation of pooled cash on a monthly basis, it is difficult to determine if
the cash balance is correct at the end of each month. Also, a misappropriation of funds could
occur and remain undetected for an extended period of time.
Recommendation:
We recommend that the City reconcile the pooled cash on a monthly basis and the
reconciliation be approved by a responsible employee.
Managements Response:
Agreed. Like all of the actual bank accounts, the pooled cash fund should be reconciled on a
monthly basis. Our pooled cash accounting structure is a bit different than normal. Because
of this difference, the importance of reconciling the actual bank accounts is greater than the
reconciliation of the pooled accounts. As mentioned in earlier responses, the Finance
Department is short staffed due to covering of the Human Resources and Risk Management
areas and does not have the resources to complete in a timely manner many of the tasks that
accrue to it on a monthly basis. With the implementation of the new finance system, we
anticipate many of the tasks and duties that are required now will be easier to implement or
will go away entirely.
Significant Deficiencies
2015-02
Finding Cash receipts function has overlapping duties:

During our review of internal controls, it was noted the cash receipting function has
overlapping duties. The overlapping duties are: preparing/posting receipts, preparing deposit
slips, making the deposit, maintaining custody of petty cash, replenishing petty cash, and
resolving complaints.
Effect:
With overlapping duties within the cash receipting function, there is an increased risk of a
misappropriation of assets to occur and remain undetected.
Recommendation:
We recommend the cash receipting function has adequate segregation of duties in order to
decrease the risk of misappropriation of assets.
Agreed. As has been pointed out by other recent auditors, because of the size of the Finance
Department staff, many of the financial internal controls are not as effective as they would be
otherwise, were there a greater staff size. While there are certain tasks that, optimally, would
be handled by multiple individuals to increase internal control, we have limited staff so that
each staff member must complete more tasks in a given process, making the internal control
potentially less effective. While we dont have the staff size to maximize internal control
strengths, we have analyzed the segregation of duties, and have implemented separation where
the greatest risk of loss could occur.

Significant Deficiencies (Continued)
2015-03
Finding Payroll function has overlapping duties:

During our review of internal controls, it was noted the payroll function has overlapping
duties. The overlapping duties are: maintaining personnel files, entering employees into the
payroll system, making wage rate changes in the system, entering hours into the system,
verifying hours input into the payroll system, reviewing the payroll register, preparing the
payroll journal, and preparing payroll checks.
Effect:
With overlapping duties within the payroll function, there is an increased risk of incorrect
reporting of payroll expenses or data and a misappropriation of assets to occur and go
undetected.
Recommendation:
We recommend the City maintain adequate segregation of duties within the payroll function in
order to decrease the risk of misreporting and/or misappropriation of assets related to payroll.
Agreed. Again, as has been pointed out by other auditors in recent years, because of the size
of the Finance Department staff, many of the financial internal controls are not as effective as
they would be otherwise, were there a greater staff size. Especially in case of payroll, the City
has been without adequate Human Resources personnel that would normally mitigate the
internal control risk related to payroll activities. In this case, the staff member who has been
taking care of the payroll is also processing as many of the HR tasks as possible. With the
hiring of a Human Resources Manager in May, 2016, this risk should be mitigated
substantially.
2015-04
Finding Cash disbursements function has overlapping duties:

During our review of internal controls, it was noted the cash disbursements function has an
overlapping duty. The overlapping duty is: preparing checks and also maintaining custody of
the checks after they are signed.
Effect:
With overlapping duties within the cash disbursements function, there is an increased risk of
misappropriation of assets to occur and remain undetected.
Recommendation:
We recommend the City maintain adequate segregation of duties within the cash
disbursements function in order to decrease the risk of misappropriation of assets.
Agreed. Again, as has been pointed out by other recent auditors, because of the size of the
Finance Department staff, many of the financial internal controls are not as effective as they
would be otherwise, were there a greater staff size. While there are certain tasks that,
optimally, would be handled by multiple individuals to increase internal control, we have
limited staff so that each staff member must complete more tasks in a given process, making
the internal control potentially less effective. While we dont have the staff size to maximize
internal control strengths, we have analyzed the segregation of duties, and have implemented
separation where the greatest risk of loss could occur.

2015-05
Finding No review or sign-off on fuel usage reports:

During our review of internal controls, it was noted appropriate management does not formally
review or sign-off on fuel usage reports.
Effect:
Without proper review or sign-offs on fuel usage reports, there is an increased risk of
unauthorized use of City fuel.
Recommendation:
We recommend the City implement review and sign-off procedures on fuel usage reports in
order to help prevent unauthorized usage of City fuel.
Agreed. In the past, fuel reporting was not being monitored as closely as it is now. Currently,
the fuel usage report is run quarterly and is reviewed for any anomalies by the Streets
Supervisor and Public Works Director, signed when approved, and retained.
2015-06
Finding No supporting receipts for numerous City credit card purchases:

During our review of credit card statements, we noted numerous purchases without receipts
(check no. 129239).
Effect:
Without retention of receipts, there is no way to substantiate credit card purchases, and there is
an increased risk of unauthorized/unreasonable purchases being charged on the City credit
card.
Recommendation:
We recommend City employees retain and submit receipts for all credit card transactions in
order to prevent unauthorized transactions from being charged on the City credit card and
retain for future verification.
Agreed. The City has taken the following steps to prevent unauthorized transactions:
A new card has been issued to Admin Services Dept. and use is strictly monitored. (The
card is used only by the Finance and Planning Department if absolutely necessary).
Receipts are mandatory, and
The purchase order must be approved by the Director of Budgets and Contracts or the
Finance Manager.
The past problem of all Finance and City Admin staff having free access to the Admin CalCard has been resolved.
2015-07
Finding Excessive use of override function at refueling station and lack of vehicle number
on vehicle log:
During our review of gasoline usage, we noted the override function was used 65 times in
December 2014 and March 2015. Additionally, no vehicle number was logged during 18
different fuelings in December 2014 and March 2015.

Effect:
With an excessive use of the override function over gasoline usage, there is a higher likelihood
of unauthorized use of the Citys refueling station. Additionally, without a vehicle number
being logged, there is no way to validate that the vehicle being fueled was an authorized City
vehicle.
Recommendation:
We recommend the City cease the use of or disable the override function, and require that
vehicle numbers be logged each time the Citys refueling station is accessed.
Agreed. The override situation has been addressed with a new locking covering and the
override switch has been disabled.
2015-08
Finding No approved position schedule for the 2014-15 fiscal year for non-safety
employees:
During our review of payroll, we noted there was no approved position schedule for the 201415 fiscal year for non-safety employees.
Effect:
Without an approved position schedule for the 2014-15 there is no way to verify if the
employees are being paid at the correct wage rate for their step and range. Also, employee vs.
employer litigation could result.
Recommendation:
We recommend the City prepare an approved position schedule every fiscal year for all
employees, in accordance with employment agreements.
Agreed. The City has been without a Human Resources Manager for a number of years, and
some of the duties (specifically the ones that are not required in order to get employees paid in
a timely and accurate manner) were not attended to. The Finance staff that processes payroll
has picked up the necessary duties in order to process payroll, but has not had the time to pick
up all of the duties of the HR Manager. The good news is that we hired a new Human
Resources Manager last month, and this finding is on her list of issues to address.
2015-09
Finding Firefighters are using the same employee ID to refuel the fire vehicles:
During our review of internal controls, we noted firefighters are using the same employee ID
(#4334) to refuel the vehicles rather than having one unique ID per person.
Effect:
When firefighters use the same employee ID to refuel the vehicles, there is no way to track
who is accessing the refueling station. This could lead to a misappropriation of fuel to occur
and remain undetected.
Recommendation:
We recommend each firefighter be assigned their own one unique ID and that each firefighter
use their individual unique ID each time during refueling of vehicles.

Agreed. Every firefighter is being assigned their own unique ID and each firefighter will use
that ID during refueling of the vehicles.
2015-10
Finding Deficiencies in police cash receipts:

During our review of internal controls, we noted there was no verification by Finance that all
police receipts are accounted for when brought over to the Finance department (no tracking to
ensure all days are accounted for). Also, we noted the police department cash receipts are
reconciled and the deposit is prepared by an employee who is also one of the employees who
receives payments and issues receipts.
Effect:
Without proper review of police receipts to ensure that all days are accounted for, there is no
way to verify if any days are missing. Also, there is an increased risk of a misappropriation of
funds to occur and remain undetected when there is a lack of segregation of duties in the cash
receipts process.
Recommendation:
We recommend the Finance Department verify that all days are accounted for at the time of
receipt. We also recommend segregation of duties be implemented in the Police Department
so that cash receipts are not reconciled and deposited by an employee who is also one of the
employees who receives payments and issues receipts.
Agree/Disagree. Agree that someone at PD, other than anyone who processes cash receipts
should at least verify the reconciliation of cash receipts. The payments recap that Finance
receives now has individual receipt numbers segregated by receipt type. Currently, no one
reviews that each receipt number is accounted for, and that there are no gaps or double
counting. Finance will develop a sign-off sheet that a supervisor at the Police Department can
use to verify the numbering sequence is not broken. Finance will double check on our end
before posting and depositing.
Finance currently receives the complete packet from the PD, re-counts the cash, checks and
credit card receipts, verifies the reconciliation, signs as such, then makes the actual deposits
(with the exception of the credit card deposits that are automatically posted by the bank).
2015-11
Finding Payroll deficiencies:

During our test of payroll, we noted 3 timesheets lacked an employee signature, department
signature or both; one W-4 form was missing an employee signature; one employment
application was not obtained/retained; one PAR contained a different wage rate than what is
being paid; two vacation accrual rates appeared to be incorrect; one employee is not having
Medicare tax withheld; the salary schedule for safety employees with extra pay (2.5% and 5%)
was calculated incorrectly; and two I-9 forms were not obtained/retained.
10

Effect:
Without proper approval and retention of personnel/payroll documents, we are unable to verify
whether employees are being paid for the correct hours, whether they are being paid at the
correct pay rate, or if compensatory time balances are correct. Additionally, missing I-9 forms
could result in fines if the City were to be audited by the Department of Justice. Lack of
employee signatures on W-4 forms and lack of an employment application could indicate
fictitious employees.
Recommendation:
We recommend all timesheets, W-4 forms, I-9 forms, and employment applications be signed
and retained for future verification. We also recommend vacation accrual rates be correctly
calculated, that Medicare tax be withheld for all employees, and the salary schedule for safety
employees with extra pay (2.5% and 5%) be correctly calculated.
Agreed. We have reviewed the documents in question as well as the policy that guides them.
There were oversights made related to procuring all required signatures and paperwork. We
will institute a check and balance system to make sure that all signatures and paperwork are
collected.
2015-12
Finding Lack of procurement documentation:

During our test of procurement, we noted two instances out of four where proof of
advertisement was not obtained/retained (Silveira and Government Staffing) and there was no
record of the bid results for these two vendors.
Effect:
Without proper procurement documentation, we were unable to verify whether the City
complied with required procurement procedures.
Recommendation:
We recommend the City maintain records of all procurement procedures for future
verification.
Disagree. There might be some confusion regarding where the relevant documentation
resides. During the purchasing process, there are several people involved, and several files
that get created: the project manager has important records, a copy of the contract will reside
in the eventual accounts payable with Finance, the advertisement or relevant noticing will
reside in the official publication of notice accounts payable file, also in Finance.
In the two examples noted, there are files that contain either tear sheets or other methods
that vouch for the fact that a noticing occurred. In the case of Government Staffing, the
normal noticing requirements are not used, since we use Government Staffing to secure
specialized governmental staffing, in this case, an interim City Clerk.
2015-13
Finding Master fee schedule has not been approved annually:

During our test of cash receipts, we noted the master fee schedule has not been approved
annually by the City Council.
11

Effect:
Without proper annual approval of the master fee schedule, we were unable to verify whether
the City was charging the correct fees to customers.
Recommendation:
We recommend the City Council approve a master fee schedule on an annual basis.
Agree, but with a caveat. Agree with the fact that the City Council has not approved the master
fee schedule for the past two years, but disagree with the assumption that the City Council
does not routinely approve the master fee schedule annually. Last year, the City Council
chose to not increase the master fee schedule by the normal CPI index amount, leaving it the
same as the previous year, so the prior year rates were effectively adopted by default. For
FY16-17, the Council is actively engaging with the public to change a number of fees and
charges, but that dialog is not yet complete, and will be updated and approved when the new
rates have been agreed upon.
2015-14
Finding Deficiencies in cash disbursements:

During our test of cash disbursements, we noted the following: one purchase order was
missing an approval signature (#130878); approval signatures are not recorded on the paid
invoice; one purchase order was missing the preparers signature (#130941); and one invoice
was not obtained/retained (#129896).
Effect:
Without proper approvals on invoices and purchase orders, and without the retention of
invoices, we were unable to verify if the purchases were authorized. Also, there is an increase
in the risk of unauthorized expenditures to occur and go undetected.
Recommendation:
We recommend there are approvals on invoice and purchase orders prior to payment. We also
recommend all applicable invoices be retained for future verification.
Agreed. There have been instances where certain documents work their way through the
process without the proper authorization. The issue here is not one of lacking a policy, but
making sure that it is followed 100% of the time. We have modified our process a little in that
two managers from the Finance Department are currently reviewing all purchase orders and
initialing.
2015-15
Finding Deficiencies in cash receipts:

During our test of cash receipts, we noted the following: two source documents were not
obtained or retained (receipt numbers 02842 and 02932); three fees appeared to be calculated
incorrectly (receipt numbers 02783, 02953, and 58922); one receipt could not be traced to the
deposit slip or bank statement (receipt number 02783); and two fees could not be located in the
fee schedule (receipt numbers 57653 and 59610).
12

Effect:
Without retention of source documents, we were unable to verify if the City charged the
correct fees to the customer. Incorrectly calculated fees result in mischarging of customers.
Without being able to determine if the cash receipt was deposited to the bank, there is an
increased risk of misappropriation of cash receipts to occur and remain undetected. Finally,
with the lack of fees listed in the fee schedule, we were unable to verify whether the City was
charging appropriate amounts for the services performed.
Recommendation:
We recommend the City retain all source documents involving cash receipts. We also
recommend fees be calculated correctly and all cash receipts traceable to the bank statements.
Finally, we recommend the City includes all classifications of fees on the fee schedule.
Disagree. In reviewing the cash receipts cited, the City verified that, in some instances, the
retention of source documents is not necessary. For example, a simple private tree trimming
(2842) or a day use parking space that is documented in a log book (2932), we feel, is
sufficient to verify correct fees. The application for a fixed location sign permit (59064) was
properly accounted. The Police Department cash deposit receipt (2783) was verified as
deposited on a combined July-August deposit and accounting was correct. Receipts 57653 and
59610 were verified as posting correctly to GL as storage fees and ASBS Storm Drain deposit
respectively. The issue of the fee schedule is addressed in a separate finding. Additionally,
starting immediately, the Planning & Building Department will start recording the receipt
number in their database, as a cross reference.
Other Matters
2015-16
Finding Lack of video cameras at the Corporation Yard:

During our review of internal controls, it was noted there are no video cameras installed at the
Corporation Yard.
Effect:
Without a video camera at the Corporation Yard, there is a lack of oversight over the
safeguarding of assets.
Recommendation:
We recommend the City place video cameras at the Corporation Yard to help detect
unauthorized activity and to decrease the risk of a misappropriation of assets.
Agreed. The Police Department has agreed to include the purchase of a Corporation Yard
surveillance system when they update their current police department surveillance system this
fiscal year (FY16-17).
13

Other Matters (Continued)
2015-17
Finding The Public Works building has numerous inventory supplies that are not being used
and are not properly safeguarded:
During our review of internal controls, we noted the Public Works building has numerous
filters, brake pads, lights, belts, fuses and other auto supplies that are not being used anymore
and are not properly safeguarded.
Effect:
With numerous outdated supplies not being safeguarded properly, there is an increased risk
that those assets could be misappropriated and remain undetected.
Recommendation:
We recommend the City dispose of outdated inventory supplies and properly safeguard all
remaining inventory supplies.
Agreed. We have changed our process related to this supplies inventory. For the existing auto
parts inventory, it now resided in a locked cabinet, within a locked room at Public Works.
Only three supervisors/managers have the keys. This inventory is obsolete and will be
disposed of via auction. Current small auto parts will be purchased as needed.
2015-18
Finding Petty cash was not safeguarded

During our audit of petty cash, we noted a majority of the petty cash for Community Services
($270) was not safeguarded in the petty cash box, but rather the cash and receipts were with an
employee.
Effect:
There is the potential for the petty cash and receipts to be lost or misplaced when they are not
properly safeguarded.
Recommendation:
We recommend petty cash and related receipts be safeguarded in a petty cash box at all times.
Agreed. In the incident cited, the employee had withdrawn petty cash, purchased items, and
hadnt yet returned the receipt and left over petty cash to the cash box. The process has been
tightened up, and now the excess cash withdrawn and receipts are immediately returned to the
cash box, which is kept in a locked safe.
2015-19
Finding The COPS grant revenue was being recorded to fund balance instead of a revenue
account:
During our audit of the financial statements, we noted COPS grant money was being recorded
to fund balance instead of a revenue account.
Effect:
Misposting of revenues results in misstated financial statements.
Recommendation:
We recommend the City record COPS grant money to the appropriate revenue account instead
of recording the revenue in the fund balance account.
14

Agreed. The auto coding for the receipt of our COPS grant was erroneously crediting this
revenue to the fund balance instead of the revenue account. We have had this same error in
prior years and corrected it for the financial statements.
For this year, we have corrected that coding, and now all COPS grant revenue is being posted
correctly.
2015-20
Finding No contract with Forest Theatre Guild for storage fees:

During our test of cash receipts, we noted there is no contract with the Forest Theatre Guild for
storage fees of $135.
Effect:
Without a signed contract with Forest Theatre Guild, we were unable to verify whether the
storage fees of $135 are correct.
Recommendation:
We recommend the City obtain and retain a signed contract with the Forest Theatre Guild.
Agreed. The contract had expired in the early 2000s, and the Guild has vacated the storage
locker.
2015-21
Finding Lack of approval signatures on credit card statements:

During our testing of internal control over credit card statements, we noted there were five out
of six statements that did not contain an approval signature.
Effect:
Without proper approval signatures on credit card transactions, there is an increased risk of
unauthorized credit card transactions occurring.
Recommendation:
We recommend responsible officials of the City review and approve all credit card
transactions to ensure that the expenses are for allowable and appropriate purposes.
Agreed/Disagree. We do agree that we should have a policy where all credit card transactions
are reviewed and signed by a responsible official of the City, but we do not agree that the
examples do not have the above approval signatures. When we reviewed certain purchase
orders/receipts, we did find that some of those receipts were signed by administrators in
different places, not the designated areas. We will make sure that all approvers sign exactly
where they are instructed, and that all purchases have approval signatures.
2015-22
Finding Lack of audit committee:

During our review of policies and procedures, we noted the City does not have an audit
committee.
Effect:
Lack of additional oversight occurs when there is no audit committee.
15

Recommendation:
We recommend the City form an audit committee for increased oversight.
Agreed. The addition of an Audit Committee to which the auditors would report would
increase control and transparency to the City Council. If the City Council agrees, this could be
in place for the next financial audit.
2015-23
Finding Inconsistent use of time clocks:

During our review of internal controls, we noted only some departments, rather than all
departments, were utilizing time clocks.
Effect:
Inconsistency in the reporting of hours worked could lead to misreporting of hours and
incorrect payments to employees.
Recommendation:
We recommend all departments utilize time clocks in order to ensure consistent time reporting.
Agreed. In May, 2015, the City Administrator requested that time clocks be installed for use
in the Public Works Department and the Library. In September, 2015 he requested they be
removed. Time clocks are not currently being utilized for payroll timekeeping in any
department.
2015-24
Finding Deposit payable accounts and fee collection accounts have debit balances:
During our review of internal controls, we noted seven deposit payable accounts have debit
balances and two fee collection accounts have debit balances.
Effect:
With deposit payable accounts and fee collection accounts having debit balances, the City has
balances due from customers. Deposit accounts should never have balances due as the City
may not be able to collect on the outstanding balances.
Recommendation:
We recommend the City attempt collection of all debit balances on deposit accounts. Fee
collection accounts with debit balances should be investigated and adjusted accordingly.
Agreed. Of the seven non-fee collection accounts, one dates back to 6/30/2011, the others are
more recent. We will work on figuring out what the balances represent and correct. The two
fee collection accounts have had positive balances of similar balances since 6/30/2011. We
will work on figuring out what that represents and correct. With the implementation of the
new finance system, we will be utilizing a more proper accounts receivable system to track
these types of transactions, and we should not have the same issues in the future.
16

2015-25
Finding One check issued out of sequence and one outstanding check over one year old:
During our audit of cash, we noted one check was issued out of sequence (check #3140 was
issued on July 2, 2015, while #3141-3142 were issued on June 30, 2015). We also noted one
outstanding check that was over one year old (check #2167, dated April 23, 2013).
Effect:
Checks being issued out of sequence makes it more difficult to perform bank reconciliations as
well as ensuring the accounting of all checks. Stale dated checks could cause the cash balance
to be inappropriately understated.
Recommendation:
We recommend the City issue all checks in numerical sequence and all outstanding checks that
are over one year old should be investigated, sent to the state as escheat property, or written
off/voided.
Agreed. We will make sure that all checks are issued in sequence and that all stale dated
checks have been voided and off of the bank reconciliations.
2015-26
Finding Petty cash is listed at incorrect amount:

During our review of internal controls, we noted the petty cash is listed as $460, yet the actual
petty cash count was $230.
Effect:
The petty cash is overstated in the general ledger, resulting in an incorrect balance on the
financial statements.
Recommendation:
We recommend the City reconcile and count the petty cash on a regular basis, and that the
petty cash be recorded in the general ledger accurately.
Agreed. The City has multiple petty cash locations: City Hall, Police Department and the
Library (2 locations). The balances in each of these locations are as follows: City Hall - $250,
Police Department - $100, Library #1 - $100, Library #2 - $275, for a total of $725.00. On the
general ledger, the City shows two Petty Cash accounts. One is listed at $725.00, and the
other at $150.00. In 2007, a petty cash fund was established for the Fire Department, but was
discontinued in 2011. The lock box was returned to Finance, the contents (less receipts) were
deposited to bank. The Petty Cash listed is now correct.
17
STATUS OF PRIOR YEAR RECOMMENDATIONS

No findings noted in the prior fiscal year audit.
18

FY14-15 Independent Financial Statement Audit 12-06-16

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CITY OF CARMEL-BY-THE-SEA

Honorable Mayor and City Council Members

Paul Wood, CPA - Finance Manager

Chip Rerig, City Administrator

Acceptance of FY14-15 Independent financial statement audit

THE CITY OF CARMEL-BY-THE-SEA

COMMERCIAL ACCOUNTING & TAX SERVICES

GOVERNMENTAL AUDIT SERVICES

INDEPENDENT AUDITORS REPORT

Other Reporting Required by Government Auditing Standards

Moss, Levy & Hartzheim, LLP

City of Carmel-by-the-Sea, California

City of Carmel-by-the-Sea, California

OVERVIEW OF THE ANNUAL FINANCIAL REPORT

City of Carmel-by-the-Sea, California

OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT, Continued

City of Carmel-by-the-Sea, California

OVERVIEW OF THE COMPREHENSIVE ANNUAL FINANCIAL REPORT, Continued

City of Carmel-by-the-Sea, California

GOVERNMENT-WIDE FINANCIAL ANALYSIS

City of Carmel-by-the-Sea, California

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued

City of Carmel-by-the-Sea, California

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued

City of Carmel-by-the-Sea, California

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued

City of Carmel-by-the-Sea, California

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued

Revenues by Source - Governmental Activities

Revenues by Source - Governmental Activities

City of Carmel-by-the-Sea, California

GOVERNMENT-WIDE FINANCIAL ANALYSIS, Continued

City of Carmel-by-the-Sea, California

DEFERRED OUTFLOWS OF RESOURCES

Total Deferred Outflows of Resources

Total Assets and Deferred Outflows of Resources

DEFERRED INFLOWS OF RESOURCES

Total Deferred Inflows of Resources

Total Liabilities and Deferred Inflows of Resources

Total Net Position

See notes to basic financial statements

Total general revenues

Change in net position

Net position - beginning of fiscal year

See notes to basic financial statements

CITY OF CARMEL BY-THE-SEA

Liabilities and Fund Balances

Total Liabilities and Fund

See notes to basic financial statements

THIS PAGE INTENTIONALLY LEFT BLANK

Fund Balances - Total Governmental Funds

Amounts reported for Governmental Activities in the Statement of Net Position

Deferred outflows and inflows of resources relating to pensions: In governmental funds,

Net Position of Governmental Activities

See notes to basic financial statements

Excess of Revenues Over (Under)

Other Financing Sources (Uses)

Fund Balances (Deficits), July 1, 2014, restated

See notes to basic financial statements

THIS PAGE IS INTENTIONALLY LEFT BLANK

Net change in fund balances - total governmental funds

Amounts reported for governmental activities in the Statement of Activities are

Some expenses reported in the Statement of Activities do not require the

See notes to basic financial statements